Correlation Between Global Ship and Ardmore Shpng

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

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

Diversification Opportunities for Global Ship and Ardmore Shpng

0.06

Correlation Coefficient

Global Ship  Ardmore Shpng

Significant diversification

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

Pair Corralation between Global Ship and Ardmore Shpng

Considering the 90-day investment horizon Global Ship Lease is expected to generate 0.79 times more return on investment than Ardmore Shpng. However, Global Ship Lease is 1.26 times less risky than Ardmore Shpng. It trades about 0.36 of its potential returns per unit of risk. Ardmore Shpng is currently generating about 0.03 per unit of risk. If you would invest  2,005  in Global Ship Lease on January 26, 2024 and sell it today you would earn a total of  234.00  from holding Global Ship Lease or generate 11.67% return on investment over 90 days.

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

Global Ship Lease  vs.  Ardmore Shpng

Global Ship Lease

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Global Ship may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Ardmore Shpng

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ardmore Shpng are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Ardmore Shpng is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global Ship and Ardmore Shpng

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

The idea behind Global Ship Lease and Ardmore Shpng 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.