Correlation Between SD Standard and MPC Container

Can any of the company-specific risk be diversified away by investing in both SD Standard and MPC Container 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 SD Standard and MPC Container into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SD Standard Drilling and MPC Container Ships, you can compare the effects of market volatilities on SD Standard and MPC Container 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 SD Standard with a short position of MPC Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of SD Standard and MPC Container.

Diversification Opportunities for SD Standard and MPC Container

-0.6

Correlation Coefficient

SD Standard  MPC Container

Excellent diversification

The 3 months correlation between SDSD and MPC is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SD Standard Drilling and MPC Container Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Container Ships and SD Standard 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 SD Standard Drilling are associated (or correlated) with MPC Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Container Ships has no effect on the direction of SD Standard i.e., SD Standard and MPC Container go up and down completely randomly.

Pair Corralation between SD Standard and MPC Container

Assuming the 90 days trading horizon SD Standard Drilling is expected to under-perform the MPC Container. But the stock apears to be less risky and, when comparing its historical volatility, SD Standard Drilling is 3.18 times less risky than MPC Container. The stock trades about -0.07 of its potential returns per unit of risk. The MPC Container Ships is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,440  in MPC Container Ships on April 23, 2025 and sell it today you would earn a total of  398.00  from holding MPC Container Ships or generate 27.64% return on investment over 90 days.

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

SD Standard Drilling  vs.  MPC Container Ships

SD Standard Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days SD Standard Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, SD Standard is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MPC Container Ships

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MPC Container Ships are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, MPC Container disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SD Standard and MPC Container

The main advantage of trading using opposite SD Standard and MPC Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SD Standard position performs unexpectedly, MPC Container 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 MPC Container will offset losses from the drop in MPC Container's long position.

The idea behind SD Standard Drilling and MPC Container Ships 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.