Correlation Between Euroseas and DAmico International

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

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

Diversification Opportunities for Euroseas and DAmico International

0.47

Correlation Coefficient

Euroseas  DAmico International

Very weak diversification

The 3 months correlation between Euroseas and DAmico is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Euroseas and dAmico International Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dAmico International and Euroseas 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 Euroseas are associated (or correlated) with DAmico International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dAmico International has no effect on the direction of Euroseas i.e., Euroseas and DAmico International go up and down completely randomly.

Pair Corralation between Euroseas and DAmico International

Given the investment horizon of 90 days Euroseas is expected to generate 1.79 times more return on investment than DAmico International. However, Euroseas is 1.79 times more volatile than dAmico International Shipping. It trades about -0.01 of its potential returns per unit of risk. dAmico International Shipping is currently generating about -0.03 per unit of risk. If you would invest  3,354  in Euroseas on December 20, 2024 and sell it today you would lose (232.00) from holding Euroseas or give up 6.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Euroseas  vs.  dAmico International Shipping

Euroseas

Risk-Adjusted Performance

Very Weak

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

dAmico International

Risk-Adjusted Performance

Very Weak

Over the last 90 days dAmico International Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DAmico International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Euroseas and DAmico International

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

The idea behind Euroseas and dAmico International 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..