Correlation Between Genco Shipping and Danaos

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

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

Diversification Opportunities for Genco Shipping and Danaos

0.29

Correlation Coefficient

Genco Shipping  Danaos

Modest diversification

The 3 months correlation between Genco and Danaos is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Genco Shipping Trading and Danaos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaos and Genco Shipping 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 Genco Shipping Trading are associated (or correlated) with Danaos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaos has no effect on the direction of Genco Shipping i.e., Genco Shipping and Danaos go up and down completely randomly.

Pair Corralation between Genco Shipping and Danaos

Considering the 90-day investment horizon Genco Shipping Trading is expected to under-perform the Danaos. In addition to that, Genco Shipping is 1.23 times more volatile than Danaos. It trades about -0.02 of its total potential returns per unit of risk. Danaos is currently generating about 0.02 per unit of volatility. If you would invest  7,812  in Danaos on December 27, 2024 and sell it today you would earn a total of  95.00  from holding Danaos or generate 1.22% return on investment over 90 days.

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

Genco Shipping Trading  vs.  Danaos

Genco Shipping Trading

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genco Shipping Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Genco Shipping is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Danaos

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Danaos are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Danaos is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Genco Shipping and Danaos

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

The idea behind Genco Shipping Trading and Danaos 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.