Correlation Between Diana Shipping and Global Ship

Can any of the company-specific risk be diversified away by investing in both Diana Shipping and Global 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 Diana Shipping and Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Diana Shipping inc and Global Ship Lease, you can compare the effects of market volatilities on Diana Shipping and Global 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 Diana Shipping with a short position of Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diana Shipping and Global Ship.

Diversification Opportunities for Diana Shipping and Global Ship

0.06

Correlation Coefficient

Diana Shipping  Global Ship

Significant diversification

The 3 months correlation between Diana and Global is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Diana Shipping inc and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and Diana 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 Diana Shipping inc are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Diana Shipping i.e., Diana Shipping and Global Ship go up and down completely randomly.

Pair Corralation between Diana Shipping and Global Ship

Considering the 90-day investment horizon Diana Shipping inc is expected to under-perform the Global Ship. But the stock apears to be less risky and, when comparing its historical volatility, Diana Shipping inc is 1.22 times less risky than Global Ship. The stock trades about -0.07 of its potential returns per unit of risk. The Global Ship Lease is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,968  in Global Ship Lease on January 20, 2024 and sell it today you would earn a total of  152.00  from holding Global Ship Lease or generate 7.72% return on investment over 90 days.

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

Diana Shipping inc  vs.  Global Ship Lease

Diana Shipping inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diana Shipping inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Diana Shipping is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Global Ship Lease

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Global Ship is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Diana Shipping and Global Ship

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

The idea behind Diana Shipping inc and Global 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.