Correlation Between COSCO SHIPPING and Diana Shipping

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

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

Diversification Opportunities for COSCO SHIPPING and Diana Shipping

-0.04

Correlation Coefficient

COSCO SHIPPING  Diana Shipping

Good diversification

The 3 months correlation between COSCO and Diana is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Ports and Diana Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diana Shipping and COSCO SHIPPING 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 COSCO SHIPPING Ports are associated (or correlated) with Diana Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diana Shipping has no effect on the direction of COSCO SHIPPING i.e., COSCO SHIPPING and Diana Shipping go up and down completely randomly.

Pair Corralation between COSCO SHIPPING and Diana Shipping

Assuming the 90 days horizon COSCO SHIPPING Ports is expected to generate 3.44 times more return on investment than Diana Shipping. However, COSCO SHIPPING is 3.44 times more volatile than Diana Shipping. It trades about 0.06 of its potential returns per unit of risk. Diana Shipping is currently generating about -0.08 per unit of risk. If you would invest  37.00  in COSCO SHIPPING Ports on September 21, 2024 and sell it today you would earn a total of  19.00  from holding COSCO SHIPPING Ports or generate 51.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.36%
Values	Daily Returns

COSCO SHIPPING Ports  vs.  Diana Shipping

COSCO SHIPPING Ports

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Ports are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, COSCO SHIPPING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Diana Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diana Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with COSCO SHIPPING and Diana Shipping

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

The idea behind COSCO SHIPPING Ports and Diana 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.