Correlation Between Genco Shipping and US Global

Can any of the company-specific risk be diversified away by investing in both Genco Shipping and US Global 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 US Global 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 US Global Sea, you can compare the effects of market volatilities on Genco Shipping and US Global 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genco Shipping and US Global.

Diversification Opportunities for Genco Shipping and US Global

0.32

Correlation Coefficient

Genco Shipping  US Global

Weak diversification

The 3 months correlation between Genco and SEA is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Genco Shipping Trading and US Global Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Sea 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 US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Sea has no effect on the direction of Genco Shipping i.e., Genco Shipping and US Global go up and down completely randomly.

Pair Corralation between Genco Shipping and US Global

Considering the 90-day investment horizon Genco Shipping is expected to generate 1.59 times less return on investment than US Global. In addition to that, Genco Shipping is 1.99 times more volatile than US Global Sea. It trades about 0.02 of its total potential returns per unit of risk. US Global Sea is currently generating about 0.06 per unit of volatility. If you would invest  1,257  in US Global Sea on December 17, 2024 and sell it today you would earn a total of  38.00  from holding US Global Sea or generate 3.02% 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.  US Global Sea

Genco Shipping Trading

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genco Shipping Trading are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

US Global Sea

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in US Global Sea are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, US Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Genco Shipping and US Global

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

The idea behind Genco Shipping Trading and US Global Sea 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.