Correlation Between Diana Shipping and Golden Ocean

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

By analyzing existing cross correlation between Diana Shipping and Golden Ocean Group, you can compare the effects of market volatilities on Diana Shipping and Golden Ocean 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 Golden Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diana Shipping and Golden Ocean.

Diversification Opportunities for Diana Shipping and Golden Ocean

0.48

Correlation Coefficient

Diana Shipping  Golden Ocean

Very weak diversification

The 3 months correlation between Diana and Golden is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Diana Shipping and Golden Ocean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ocean Group 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 Golden Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ocean Group has no effect on the direction of Diana Shipping i.e., Diana Shipping and Golden Ocean go up and down completely randomly.

Pair Corralation between Diana Shipping and Golden Ocean

Considering the 90-day investment horizon Diana Shipping is expected to under-perform the Golden Ocean. But the stock apears to be less risky and, when comparing its historical volatility, Diana Shipping is 1.61 times less risky than Golden Ocean. The stock trades about -0.06 of its potential returns per unit of risk. The Golden Ocean Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  861.00  in Golden Ocean Group on December 28, 2024 and sell it today you would lose (47.00) from holding Golden Ocean Group or give up 5.46% of portfolio value over 90 days.

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

Diana Shipping  vs.  Golden Ocean Group

Diana Shipping

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Golden Ocean Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Ocean Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Golden Ocean is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Diana Shipping and Golden Ocean

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

The idea behind Diana Shipping and Golden Ocean Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.