Correlation Between Golden Ocean and HP
Can any of the company-specific risk be diversified away by investing in both Golden Ocean and HP 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 Golden Ocean and HP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Ocean Group and HP Inc, you can compare the effects of market volatilities on Golden Ocean and HP 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 Golden Ocean with a short position of HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Ocean and HP.
Diversification Opportunities for Golden Ocean and HP
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Golden and HP is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ocean Group and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc and Golden Ocean 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 Golden Ocean Group are associated (or correlated) with HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Golden Ocean i.e., Golden Ocean and HP go up and down completely randomly.
Pair Corralation between Golden Ocean and HP
Given the investment horizon of 90 days Golden Ocean Group is expected to generate 1.48 times more return on investment than HP. However, Golden Ocean is 1.48 times more volatile than HP Inc. It trades about 0.06 of its potential returns per unit of risk. HP Inc is currently generating about 0.0 per unit of risk. If you would invest 978.00 in Golden Ocean Group on January 24, 2024 and sell it today you would earn a total of 360.00 from holding Golden Ocean Group or generate 36.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Golden Ocean Group vs. HP Inc
Performance |
Timeline |
Golden Ocean Group |
HP Inc |
Golden Ocean and HP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Golden Ocean and HP
The main advantage of trading using opposite Golden Ocean and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Ocean position performs unexpectedly, HP 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 HP will offset losses from the drop in HP's long position.Golden Ocean vs. Global Ship Lease | Golden Ocean vs. Navios Maritime Partners | Golden Ocean vs. United Maritime | Golden Ocean vs. Top Ships |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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