Correlation Between Euroseas and Star Bulk

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

By analyzing existing cross correlation between Euroseas and Star Bulk Carriers, you can compare the effects of market volatilities on Euroseas and Star Bulk 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 Star Bulk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euroseas and Star Bulk.

Diversification Opportunities for Euroseas and Star Bulk

-0.47

Correlation Coefficient

Euroseas  Star Bulk

Very good diversification

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

Pair Corralation between Euroseas and Star Bulk

Given the investment horizon of 90 days Euroseas is expected to under-perform the Star Bulk. In addition to that, Euroseas is 1.59 times more volatile than Star Bulk Carriers. It trades about -0.02 of its total potential returns per unit of risk. Star Bulk Carriers is currently generating about 0.08 per unit of volatility. If you would invest  1,461  in Star Bulk Carriers on December 28, 2024 and sell it today you would earn a total of  151.00  from holding Star Bulk Carriers or generate 10.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Euroseas  vs.  Star Bulk Carriers

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.

Star Bulk Carriers

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Star Bulk Carriers are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Star Bulk may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Euroseas and Star Bulk

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

The idea behind Euroseas and Star Bulk Carriers 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.