Correlation Between Golden Ocean and TOP Ships

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

Diversification Opportunities for Golden Ocean and TOP Ships

0.05

Correlation Coefficient

Golden Ocean  TOP Ships

Significant diversification

The 3 months correlation between Golden and TOP is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ocean Group and TOP Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOP 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 TOP Ships. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOP Ships has no effect on the direction of Golden Ocean i.e., Golden Ocean and TOP Ships go up and down completely randomly.

Pair Corralation between Golden Ocean and TOP Ships

Given the investment horizon of 90 days Golden Ocean Group is expected to under-perform the TOP Ships. In addition to that, Golden Ocean is 1.29 times more volatile than TOP Ships. It trades about -0.01 of its total potential returns per unit of risk. TOP Ships is currently generating about 0.05 per unit of volatility. If you would invest  607.00  in TOP Ships on December 28, 2024 and sell it today you would earn a total of  37.00  from holding TOP Ships or generate 6.1% return on investment over 90 days.

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

Golden Ocean Group  vs.  TOP 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 quite persistent technical and fundamental indicators, Golden Ocean is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

TOP Ships

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TOP Ships are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, TOP Ships may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Golden Ocean and TOP Ships

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

The idea behind Golden Ocean Group and TOP 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.