Correlation Between Eurodry and Genco Shipping

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

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

Diversification Opportunities for Eurodry and Genco Shipping

0.8
  Correlation Coefficient
Eurodry
Genco Shipping Trading

Very poor diversification

The 3 months correlation between Eurodry and Genco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eurodry and Genco Shipping Trading in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading 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 Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of Eurodry i.e., Eurodry and Genco Shipping go up and down completely randomly.

Pair Corralation between Eurodry and Genco Shipping

Given the investment horizon of 90 days Eurodry is expected to generate 1.14 times more return on investment than Genco Shipping. However, Eurodry is 1.14 times more volatile than Genco Shipping Trading. It trades about 0.21 of its potential returns per unit of risk. Genco Shipping Trading is currently generating about 0.05 per unit of risk. If you would invest  2,235  in Eurodry on June 30, 2021 and sell it today you would earn a total of  853.00  from holding Eurodry or generate 38.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Eurodry  vs.  Genco Shipping Trading

 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 fairly sluggish basic indicators, Eurodry showed solid returns over the last few months and may actually be approaching a breakup point.
Genco Shipping Trading 
 Genco Performance
0 of 100
Over the last 90 days Genco Shipping Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Genco Shipping is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Eurodry and Genco Shipping Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Eurodry and Genco Shipping

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