Correlation Between Raytheon Technologies and COSCO SHIPPING

Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and COSCO SHIPPING 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 Raytheon Technologies and COSCO SHIPPING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Raytheon Technologies Corp and COSCO SHIPPING Development, you can compare the effects of market volatilities on Raytheon Technologies and COSCO SHIPPING 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 Raytheon Technologies with a short position of COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and COSCO SHIPPING.

Diversification Opportunities for Raytheon Technologies and COSCO SHIPPING

0.83

Correlation Coefficient

Raytheon Technologies  COSCO SHIPPING

Very poor diversification

The 3 months correlation between Raytheon and COSCO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and COSCO SHIPPING Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Devel and Raytheon Technologies 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 Raytheon Technologies Corp are associated (or correlated) with COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Devel has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Raytheon Technologies and COSCO SHIPPING

Considering the 90-day investment horizon Raytheon Technologies is expected to generate 1.9 times less return on investment than COSCO SHIPPING. But when comparing it to its historical volatility, Raytheon Technologies Corp is 3.4 times less risky than COSCO SHIPPING. It trades about 0.26 of its potential returns per unit of risk. COSCO SHIPPING Development is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  510.00  in COSCO SHIPPING Development on May 4, 2025 and sell it today you would earn a total of  216.00  from holding COSCO SHIPPING Development or generate 42.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Raytheon Technologies Corp  vs.  COSCO SHIPPING Development

Raytheon Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Raytheon Technologies Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Raytheon Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

COSCO SHIPPING Devel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Development are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, COSCO SHIPPING showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Raytheon Technologies and COSCO SHIPPING

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

The idea behind Raytheon Technologies Corp and COSCO SHIPPING Development 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.