Correlation Between EuroDry and Globus Maritime

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

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

Diversification Opportunities for EuroDry and Globus Maritime

0.87

Correlation Coefficient

EuroDry  Globus Maritime

Very poor diversification

The 3 months correlation between EuroDry and Globus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding EuroDry and Globus Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globus Maritime and EuroDry 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 EuroDry are associated (or correlated) with Globus Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globus Maritime has no effect on the direction of EuroDry i.e., EuroDry and Globus Maritime go up and down completely randomly.

Pair Corralation between EuroDry and Globus Maritime

Given the investment horizon of 90 days EuroDry is expected to generate 0.47 times more return on investment than Globus Maritime. However, EuroDry is 2.13 times less risky than Globus Maritime. It trades about -0.3 of its potential returns per unit of risk. Globus Maritime is currently generating about -0.17 per unit of risk. If you would invest  1,529  in EuroDry on September 13, 2024 and sell it today you would lose (226.00) from holding EuroDry or give up 14.78% of portfolio value over 90 days.

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

EuroDry  vs.  Globus Maritime

EuroDry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EuroDry 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.

Globus Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globus Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with EuroDry and Globus Maritime

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

The idea behind EuroDry and Globus 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.