Correlation Between Eagle Bulk and ZIM Integrated

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

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

Diversification Opportunities for Eagle Bulk and ZIM Integrated

-0.06

Correlation Coefficient

Eagle Bulk  ZIM Integrated

Good diversification

The 3 months correlation between Eagle and ZIM is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Bulk Shipping and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping and Eagle Bulk 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 Eagle Bulk Shipping are associated (or correlated) with ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of Eagle Bulk i.e., Eagle Bulk and ZIM Integrated go up and down completely randomly.

Pair Corralation between Eagle Bulk and ZIM Integrated

If you would invest  1,449  in ZIM Integrated Shipping on October 3, 2024 and sell it today you would earn a total of  698.00  from holding ZIM Integrated Shipping or generate 48.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.19%
Values	Daily Returns

Eagle Bulk Shipping  vs.  ZIM Integrated Shipping

Eagle Bulk Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Bulk Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Eagle Bulk is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ZIM Integrated Shipping

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ZIM Integrated Shipping are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward indicators, ZIM Integrated displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagle Bulk and ZIM Integrated

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

The idea behind Eagle Bulk Shipping and ZIM Integrated Shipping 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.