Correlation Between Euroseas and Golden Ocean

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

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

Diversification Opportunities for Euroseas and Golden Ocean

0.84

Correlation Coefficient

Euroseas  Golden Ocean

Very poor diversification

The 3 months correlation between Euroseas and Golden is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Euroseas 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 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 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 Euroseas i.e., Euroseas and Golden Ocean go up and down completely randomly.

Pair Corralation between Euroseas and Golden Ocean

Given the investment horizon of 90 days Euroseas is expected to generate 1.23 times more return on investment than Golden Ocean. However, Euroseas is 1.23 times more volatile than Golden Ocean Group. It trades about -0.07 of its potential returns per unit of risk. Golden Ocean Group is currently generating about -0.12 per unit of risk. If you would invest  4,329  in Euroseas on September 12, 2024 and sell it today you would lose (563.00) from holding Euroseas or give up 13.01% of portfolio value over 90 days.

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

Euroseas  vs.  Golden Ocean Group

Euroseas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euroseas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental 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

0 of 100

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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Euroseas and Golden Ocean

The main advantage of trading using opposite Euroseas and Golden Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euroseas 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 Euroseas 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.