Correlation Between Golden Ocean and MPC Container

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

Diversification Opportunities for Golden Ocean and MPC Container

0.15

Correlation Coefficient

Golden Ocean  MPC Container

Average diversification

The 3 months correlation between Golden and MPC is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ocean Group and MPC Container Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Container Ships 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 MPC Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Container Ships has no effect on the direction of Golden Ocean i.e., Golden Ocean and MPC Container go up and down completely randomly.

Pair Corralation between Golden Ocean and MPC Container

Given the investment horizon of 90 days Golden Ocean Group is expected to under-perform the MPC Container. In addition to that, Golden Ocean is 1.29 times more volatile than MPC Container Ships. It trades about -0.04 of its total potential returns per unit of risk. MPC Container Ships is currently generating about -0.02 per unit of volatility. If you would invest  176.00  in MPC Container Ships on December 19, 2024 and sell it today you would lose (8.00) from holding MPC Container Ships or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Golden Ocean Group  vs.  MPC Container Ships

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 latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

MPC Container Ships

Risk-Adjusted Performance

Very Weak

Over the last 90 days MPC Container Ships has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MPC Container is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Golden Ocean and MPC Container

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

The idea behind Golden Ocean Group and MPC Container Ships 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.