Correlation Between Star Bulk and Genco Shipping

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

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

Diversification Opportunities for Star Bulk and Genco Shipping

0.97

Correlation Coefficient

Star Bulk  Genco Shipping

Almost no diversification

The 3 months correlation between Star and Genco is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Star Bulk Carriers 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 Star Bulk 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 Star Bulk Carriers 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 Star Bulk i.e., Star Bulk and Genco Shipping go up and down completely randomly.

Pair Corralation between Star Bulk and Genco Shipping

Given the investment horizon of 90 days Star Bulk Carriers is expected to under-perform the Genco Shipping. But the stock apears to be less risky and, when comparing its historical volatility, Star Bulk Carriers is 1.08 times less risky than Genco Shipping. The stock trades about -0.07 of its potential returns per unit of risk. The Genco Shipping Trading is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,725  in Genco Shipping Trading on August 13, 2024 and sell it today you would earn a total of  18.00  from holding Genco Shipping Trading or generate 1.04% return on investment over 90 days.

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

Star Bulk Carriers  vs.  Genco Shipping Trading

Star Bulk Carriers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Bulk Carriers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Star Bulk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Genco Shipping Trading

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Genco Shipping Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Genco Shipping is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Star Bulk and Genco Shipping

The main advantage of trading using opposite Star Bulk and Genco Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Bulk 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 Star Bulk Carriers 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .