Correlation Between Cool and Performance Shipping

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

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

Diversification Opportunities for Cool and Performance Shipping

0.68

Correlation Coefficient

Cool  Performance Shipping

Poor diversification

The 3 months correlation between Cool and Performance is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cool Company and Performance Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Shipping and Cool 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 Cool Company are associated (or correlated) with Performance Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Shipping has no effect on the direction of Cool i.e., Cool and Performance Shipping go up and down completely randomly.

Pair Corralation between Cool and Performance Shipping

Given the investment horizon of 90 days Cool Company is expected to under-perform the Performance Shipping. In addition to that, Cool is 1.01 times more volatile than Performance Shipping. It trades about -0.16 of its total potential returns per unit of risk. Performance Shipping is currently generating about 0.02 per unit of volatility. If you would invest  189.00  in Performance Shipping on October 5, 2024 and sell it today you would earn a total of  1.00  from holding Performance Shipping or generate 0.53% return on investment over 90 days.

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

Cool Company  vs.  Performance Shipping

Cool Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cool Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Performance Shipping

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Shipping are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Performance Shipping is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cool and Performance Shipping

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

The idea behind Cool Company and Performance Shipping 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.