Correlation Between Genco Shipping and Clarkson PLC

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

Diversification Opportunities for Genco Shipping and Clarkson PLC

0.5

Correlation Coefficient

Genco Shipping  Clarkson PLC

Very weak diversification

The 3 months correlation between Genco and Clarkson is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Genco Shipping Trading and Clarkson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkson PLC 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 Clarkson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkson PLC has no effect on the direction of Genco Shipping i.e., Genco Shipping and Clarkson PLC go up and down completely randomly.

Pair Corralation between Genco Shipping and Clarkson PLC

Assuming the 90 days trading horizon Genco Shipping is expected to generate 1.47 times less return on investment than Clarkson PLC. In addition to that, Genco Shipping is 1.04 times more volatile than Clarkson PLC. It trades about 0.03 of its total potential returns per unit of risk. Clarkson PLC is currently generating about 0.05 per unit of volatility. If you would invest  4,500  in Clarkson PLC on August 31, 2024 and sell it today you would earn a total of  220.00  from holding Clarkson PLC or generate 4.89% return on investment over 90 days.

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

Genco Shipping Trading  vs.  Clarkson PLC

Genco Shipping Trading

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genco Shipping Trading are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Genco Shipping is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Clarkson PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clarkson PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Clarkson PLC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Genco Shipping and Clarkson PLC

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

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