Correlation Between Golden Ocean and Danaos

Can any of the company-specific risk be diversified away by investing in both Golden Ocean and Danaos 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 Danaos 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 Danaos, you can compare the effects of market volatilities on Golden Ocean and Danaos 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 Danaos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Ocean and Danaos.

Diversification Opportunities for Golden Ocean and Danaos

0.76

Correlation Coefficient

Golden Ocean  Danaos

Poor diversification

The 3 months correlation between Golden and Danaos is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ocean Group and Danaos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaos 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 Danaos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaos has no effect on the direction of Golden Ocean i.e., Golden Ocean and Danaos go up and down completely randomly.

Pair Corralation between Golden Ocean and Danaos

Given the investment horizon of 90 days Golden Ocean is expected to generate 1.4 times less return on investment than Danaos. In addition to that, Golden Ocean is 1.38 times more volatile than Danaos. It trades about 0.08 of its total potential returns per unit of risk. Danaos is currently generating about 0.15 per unit of volatility. If you would invest  7,995  in Danaos on May 6, 2025 and sell it today you would earn a total of  1,126  from holding Danaos or generate 14.08% return on investment over 90 days.

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

Golden Ocean Group  vs.  Danaos

Golden Ocean Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Ocean Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Golden Ocean may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Danaos

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Danaos are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Danaos exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Ocean and Danaos

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

The idea behind Golden Ocean Group and Danaos 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.