Correlation Between Ardmore Shpng and Global Ship

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

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

Diversification Opportunities for Ardmore Shpng and Global Ship

0.64

Correlation Coefficient

Ardmore Shpng  Global Ship

Poor diversification

The 3 months correlation between Ardmore and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ardmore Shpng 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 Ardmore Shpng 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 Ardmore Shpng 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 Ardmore Shpng i.e., Ardmore Shpng and Global Ship go up and down completely randomly.

Pair Corralation between Ardmore Shpng and Global Ship

Considering the 90-day investment horizon Ardmore Shpng is expected to generate 11.73 times less return on investment than Global Ship. But when comparing it to its historical volatility, Ardmore Shpng is 1.03 times less risky than Global Ship. It trades about 0.01 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,260  in Global Ship Lease on February 19, 2025 and sell it today you would earn a total of  328.00  from holding Global Ship Lease or generate 14.51% return on investment over 90 days.

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

Ardmore Shpng  vs.  Global Ship Lease

Ardmore Shpng

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ardmore Shpng has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Global Ship Lease

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Global Ship disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ardmore Shpng and Global Ship

The main advantage of trading using opposite Ardmore Shpng and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardmore Shpng 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 Ardmore Shpng 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.