Correlation Between Golden Ocean and Safe Bulkers

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

Diversification Opportunities for Golden Ocean and Safe Bulkers

-0.14

Correlation Coefficient

Golden Ocean  Safe Bulkers

Good diversification

The 3 months correlation between Golden and Safe is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ocean Group and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe 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 Safe Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Bulkers has no effect on the direction of Golden Ocean i.e., Golden Ocean and Safe Bulkers go up and down completely randomly.

Pair Corralation between Golden Ocean and Safe Bulkers

Given the investment horizon of 90 days Golden Ocean Group is expected to under-perform the Safe Bulkers. In addition to that, Golden Ocean is 2.08 times more volatile than Safe Bulkers. It trades about -0.2 of its total potential returns per unit of risk. Safe Bulkers is currently generating about -0.01 per unit of volatility. If you would invest  2,557  in Safe Bulkers on October 9, 2024 and sell it today you would lose (7.00) from holding Safe Bulkers or give up 0.27% of portfolio value over 90 days.

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

Golden Ocean Group  vs.  Safe Bulkers

Golden Ocean Group

Risk-Adjusted Performance

0 of 100

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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Safe Bulkers

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Golden Ocean and Safe Bulkers

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

The idea behind Golden Ocean Group and Safe 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.