Correlation Between Diana Shipping and United Maritime

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

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

Diversification Opportunities for Diana Shipping and United Maritime

0.33

Correlation Coefficient

Diana Shipping  United Maritime

Weak diversification

The 3 months correlation between Diana and United is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Diana Shipping and United Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Maritime 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 United Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Maritime has no effect on the direction of Diana Shipping i.e., Diana Shipping and United Maritime go up and down completely randomly.

Pair Corralation between Diana Shipping and United Maritime

Considering the 90-day investment horizon Diana Shipping is expected to generate 0.67 times more return on investment than United Maritime. However, Diana Shipping is 1.48 times less risky than United Maritime. It trades about -0.06 of its potential returns per unit of risk. United Maritime is currently generating about -0.09 per unit of risk. If you would invest  185.00  in Diana Shipping on December 28, 2024 and sell it today you would lose (15.00) from holding Diana Shipping or give up 8.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Diana Shipping  vs.  United Maritime

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.

United Maritime

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Diana Shipping and United Maritime

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

The idea behind Diana Shipping and United Maritime 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.