Correlation Between Ardmore Shpng and EuroDry

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

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

Diversification Opportunities for Ardmore Shpng and EuroDry

0.46

Correlation Coefficient

Ardmore Shpng  EuroDry

Very weak diversification

The 3 months correlation between Ardmore and EuroDry is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ardmore Shpng and EuroDry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EuroDry 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 EuroDry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EuroDry has no effect on the direction of Ardmore Shpng i.e., Ardmore Shpng and EuroDry go up and down completely randomly.

Pair Corralation between Ardmore Shpng and EuroDry

Considering the 90-day investment horizon Ardmore Shpng is expected to under-perform the EuroDry. In addition to that, Ardmore Shpng is 1.12 times more volatile than EuroDry. It trades about -0.09 of its total potential returns per unit of risk. EuroDry is currently generating about 0.01 per unit of volatility. If you would invest  1,121  in EuroDry on December 29, 2024 and sell it today you would earn a total of  1.00  from holding EuroDry or generate 0.09% return on investment over 90 days.

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

Ardmore Shpng  vs.  EuroDry

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 abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

EuroDry

Risk-Adjusted Performance

Very Weak

Over the last 90 days EuroDry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, EuroDry is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ardmore Shpng and EuroDry

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

The idea behind Ardmore Shpng and EuroDry 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..