Correlation Between Pacific Basin and DFDS A/S

Can any of the company-specific risk be diversified away by investing in both Pacific Basin and DFDS A/S 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 Pacific Basin and DFDS A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pacific Basin Shipping and DFDS AS, you can compare the effects of market volatilities on Pacific Basin and DFDS A/S 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 Pacific Basin with a short position of DFDS A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Basin and DFDS A/S.

Diversification Opportunities for Pacific Basin and DFDS A/S

0.79

Correlation Coefficient

Pacific Basin  DFDS A/S

Poor diversification

The 3 months correlation between Pacific and DFDS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and DFDS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFDS A/S and Pacific Basin 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 Pacific Basin Shipping are associated (or correlated) with DFDS A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFDS A/S has no effect on the direction of Pacific Basin i.e., Pacific Basin and DFDS A/S go up and down completely randomly.

Pair Corralation between Pacific Basin and DFDS A/S

Assuming the 90 days horizon Pacific Basin Shipping is expected to generate 2.09 times more return on investment than DFDS A/S. However, Pacific Basin is 2.09 times more volatile than DFDS AS. It trades about 0.11 of its potential returns per unit of risk. DFDS AS is currently generating about 0.2 per unit of risk. If you would invest  18.00  in Pacific Basin Shipping on April 24, 2025 and sell it today you would earn a total of  5.00  from holding Pacific Basin Shipping or generate 27.78% return on investment over 90 days.

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

Pacific Basin Shipping  vs.  DFDS AS

Pacific Basin Shipping

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Basin Shipping are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pacific Basin reported solid returns over the last few months and may actually be approaching a breakup point.

DFDS A/S

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DFDS AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DFDS A/S reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pacific Basin and DFDS A/S

The main advantage of trading using opposite Pacific Basin and DFDS A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Basin position performs unexpectedly, DFDS A/S 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 DFDS A/S will offset losses from the drop in DFDS A/S's long position.

The idea behind Pacific Basin Shipping and DFDS AS 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.