Correlation Between Global Ship and StealthGas

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

By analyzing existing cross correlation between Global Ship Lease and StealthGas, you can compare the effects of market volatilities on Global Ship and StealthGas 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 Global Ship with a short position of StealthGas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and StealthGas.

Diversification Opportunities for Global Ship and StealthGas

0.92

Correlation Coefficient

Global Ship  StealthGas

Almost no diversification

The 3 months correlation between Global and StealthGas is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and StealthGas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StealthGas and Global Ship 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 Global Ship Lease are associated (or correlated) with StealthGas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StealthGas has no effect on the direction of Global Ship i.e., Global Ship and StealthGas go up and down completely randomly.

Pair Corralation between Global Ship and StealthGas

Considering the 90-day investment horizon Global Ship Lease is expected to generate 0.71 times more return on investment than StealthGas. However, Global Ship Lease is 1.41 times less risky than StealthGas. It trades about -0.1 of its potential returns per unit of risk. StealthGas is currently generating about -0.12 per unit of risk. If you would invest  2,775  in Global Ship Lease on September 27, 2024 and sell it today you would lose (574.00) from holding Global Ship Lease or give up 20.68% of portfolio value over 90 days.

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

Global Ship Lease  vs.  StealthGas

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

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

StealthGas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StealthGas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Global Ship and StealthGas

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

The idea behind Global Ship Lease and StealthGas 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.