Correlation Between DAmico International and Global Ship

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

By analyzing existing cross correlation between dAmico International Shipping and Global Ship Lease, you can compare the effects of market volatilities on DAmico International and Global Ship 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 DAmico International with a short position of Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAmico International and Global Ship.

Diversification Opportunities for DAmico International and Global Ship

0.89

Correlation Coefficient

DAmico International  Global Ship

Very poor diversification

The 3 months correlation between DAmico and Global is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding dAmico International Shipping and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and DAmico International 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 dAmico International Shipping are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of DAmico International i.e., DAmico International and Global Ship go up and down completely randomly.

Pair Corralation between DAmico International and Global Ship

Assuming the 90 days horizon dAmico International Shipping is expected to under-perform the Global Ship. In addition to that, DAmico International is 1.4 times more volatile than Global Ship Lease. It trades about -0.26 of its total potential returns per unit of risk. Global Ship Lease is currently generating about -0.06 per unit of volatility. If you would invest  2,326  in Global Ship Lease on September 26, 2024 and sell it today you would lose (115.00) from holding Global Ship Lease or give up 4.94% of portfolio value over 90 days.

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

dAmico International Shipping  vs.  Global Ship Lease

dAmico International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days dAmico International Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with DAmico International and Global Ship

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

The idea behind dAmico International Shipping and Global Ship Lease 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.