Correlation Between Eurodry and Ardmore Shipping

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

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

Diversification Opportunities for Eurodry and Ardmore Shipping

0.04
  Correlation Coefficient
Eurodry
Ardmore Shipping Corp

Significant diversification

The 3 months correlation between Eurodry and Ardmore is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Eurodry and Ardmore Shipping Corp in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Ardmore Shipping Corp and Eurodry 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 Eurodry are associated (or correlated) with Ardmore Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardmore Shipping Corp has no effect on the direction of Eurodry i.e., Eurodry and Ardmore Shipping go up and down completely randomly.

Pair Corralation between Eurodry and Ardmore Shipping

Given the investment horizon of 90 days Eurodry is expected to generate 1.67 times more return on investment than Ardmore Shipping. However, Eurodry is 1.67 times more volatile than Ardmore Shipping Corp. It trades about 0.06 of its potential returns per unit of risk. Ardmore Shipping Corp is currently generating about -0.01 per unit of risk. If you would invest  800.00  in Eurodry on September 8, 2021 and sell it today you would earn a total of  1,284  from holding Eurodry or generate 160.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy94.97%
ValuesDaily Returns

Eurodry  vs.  Ardmore Shipping Corp

 Performance (%) 
      Timeline 
Eurodry 
Eurodry Performance
0 of 100
Over the last 90 days Eurodry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Eurodry Price Channel

Ardmore Shipping Corp 
Ardmore Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ardmore Shipping Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ardmore Shipping may actually be approaching a critical reversion point that can send shares even higher in January 2022.

Ardmore Price Channel

Eurodry and Ardmore Shipping Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Eurodry and Ardmore Shipping

The main advantage of trading using opposite Eurodry and Ardmore Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurodry position performs unexpectedly, Ardmore 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 Ardmore Shipping will offset losses from the drop in Ardmore Shipping's long position.
The idea behind Eurodry and Ardmore Shipping Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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