Correlation Between Golden Ocean and 2020 Bulkers

Can any of the company-specific risk be diversified away by investing in both Golden Ocean and 2020 Bulkers 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 Golden Ocean and 2020 Bulkers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Golden Ocean Group and 2020 Bulkers, you can compare the effects of market volatilities on Golden Ocean and 2020 Bulkers 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 Golden Ocean with a short position of 2020 Bulkers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Ocean and 2020 Bulkers.

Diversification Opportunities for Golden Ocean and 2020 Bulkers

0.42

Correlation Coefficient

Golden Ocean  2020 Bulkers

Very weak diversification

The 3 months correlation between Golden and 2020 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ocean Group and 2020 Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2020 Bulkers and Golden Ocean 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 Golden Ocean Group are associated (or correlated) with 2020 Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2020 Bulkers has no effect on the direction of Golden Ocean i.e., Golden Ocean and 2020 Bulkers go up and down completely randomly.

Pair Corralation between Golden Ocean and 2020 Bulkers

Assuming the 90 days trading horizon Golden Ocean Group is expected to under-perform the 2020 Bulkers. In addition to that, Golden Ocean is 1.16 times more volatile than 2020 Bulkers. It trades about -0.1 of its total potential returns per unit of risk. 2020 Bulkers is currently generating about 0.03 per unit of volatility. If you would invest  12,259  in 2020 Bulkers on December 22, 2024 and sell it today you would earn a total of  391.00  from holding 2020 Bulkers or generate 3.19% return on investment over 90 days.

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

Golden Ocean Group  vs.  2020 Bulkers

Golden Ocean Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Ocean Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

2020 Bulkers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 2020 Bulkers are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, 2020 Bulkers is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Golden Ocean and 2020 Bulkers

The main advantage of trading using opposite Golden Ocean and 2020 Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Ocean position performs unexpectedly, 2020 Bulkers 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 2020 Bulkers will offset losses from the drop in 2020 Bulkers' long position.

The idea behind Golden Ocean Group and 2020 Bulkers 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.