Correlation Between Euroseas and SEACOR Marine

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

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

Diversification Opportunities for Euroseas and SEACOR Marine

0.7

Correlation Coefficient

Euroseas  SEACOR Marine

Poor diversification

The 3 months correlation between Euroseas and SEACOR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Euroseas and SEACOR Marine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEACOR Marine Holdings 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 SEACOR Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEACOR Marine Holdings has no effect on the direction of Euroseas i.e., Euroseas and SEACOR Marine go up and down completely randomly.

Pair Corralation between Euroseas and SEACOR Marine

Given the investment horizon of 90 days Euroseas is expected to generate 0.55 times more return on investment than SEACOR Marine. However, Euroseas is 1.82 times less risky than SEACOR Marine. It trades about -0.12 of its potential returns per unit of risk. SEACOR Marine Holdings is currently generating about -0.08 per unit of risk. If you would invest  4,247  in Euroseas on October 13, 2024 and sell it today you would lose (739.00) from holding Euroseas or give up 17.4% of portfolio value over 90 days.

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

Euroseas  vs.  SEACOR Marine Holdings

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SEACOR Marine Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEACOR Marine Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Euroseas and SEACOR Marine

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

The idea behind Euroseas and SEACOR Marine Holdings 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.