Correlation Between Diana Shipping and Safe Bulkers

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

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

Diversification Opportunities for Diana Shipping and Safe Bulkers

0.51

Correlation Coefficient

Diana Shipping  Safe Bulkers

Very weak diversification

The 3 months correlation between Diana and Safe is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Diana Shipping and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers and Diana 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 Diana Shipping are associated (or correlated) with Safe Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Bulkers has no effect on the direction of Diana Shipping i.e., Diana Shipping and Safe Bulkers go up and down completely randomly.

Pair Corralation between Diana Shipping and Safe Bulkers

Assuming the 90 days trading horizon Diana Shipping is expected to generate 4.12 times less return on investment than Safe Bulkers. In addition to that, Diana Shipping is 2.36 times more volatile than Safe Bulkers. It trades about 0.01 of its total potential returns per unit of risk. Safe Bulkers is currently generating about 0.07 per unit of volatility. If you would invest  2,496  in Safe Bulkers on November 20, 2024 and sell it today you would earn a total of  43.00  from holding Safe Bulkers or generate 1.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.22%
Values	Daily Returns

Diana Shipping  vs.  Safe Bulkers

Diana Shipping

Risk-Adjusted Performance

Weak

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

Safe Bulkers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Safe Bulkers is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Diana Shipping and Safe Bulkers

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

The idea behind Diana Shipping and Safe Bulkers 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.