Correlation Between COSCO SHIPPING and FIRST SHIP

Can any of the company-specific risk be diversified away by investing in both COSCO SHIPPING and FIRST SHIP at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining COSCO SHIPPING and FIRST SHIP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COSCO SHIPPING Energy and FIRST SHIP LEASE, you can compare the effects of market volatilities on COSCO SHIPPING and FIRST SHIP and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in COSCO SHIPPING with a short position of FIRST SHIP. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSCO SHIPPING and FIRST SHIP.

Diversification Opportunities for COSCO SHIPPING and FIRST SHIP

-0.2

Correlation Coefficient

COSCO SHIPPING  FIRST SHIP

Good diversification

The 3 months correlation between COSCO and FIRST is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Energy and FIRST SHIP LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SHIP LEASE and COSCO SHIPPING is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on COSCO SHIPPING Energy are associated (or correlated) with FIRST SHIP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SHIP LEASE has no effect on the direction of COSCO SHIPPING i.e., COSCO SHIPPING and FIRST SHIP go up and down completely randomly.

Pair Corralation between COSCO SHIPPING and FIRST SHIP

Assuming the 90 days trading horizon COSCO SHIPPING Energy is expected to generate 1.2 times more return on investment than FIRST SHIP. However, COSCO SHIPPING is 1.2 times more volatile than FIRST SHIP LEASE. It trades about 0.08 of its potential returns per unit of risk. FIRST SHIP LEASE is currently generating about 0.04 per unit of risk. If you would invest  62.00  in COSCO SHIPPING Energy on April 22, 2025 and sell it today you would earn a total of  10.00  from holding COSCO SHIPPING Energy or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

COSCO SHIPPING Energy  vs.  FIRST SHIP LEASE

COSCO SHIPPING Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, COSCO SHIPPING reported solid returns over the last few months and may actually be approaching a breakup point.

FIRST SHIP LEASE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SHIP LEASE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FIRST SHIP may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with COSCO SHIPPING and FIRST SHIP

The main advantage of trading using opposite COSCO SHIPPING and FIRST SHIP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSCO SHIPPING position performs unexpectedly, FIRST SHIP can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FIRST SHIP will offset losses from the drop in FIRST SHIP's long position.

The idea behind COSCO SHIPPING Energy and FIRST SHIP LEASE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.