Correlation Between Global Ship and Safe Bulkers

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

Diversification Opportunities for Global Ship and Safe Bulkers

0.39

Correlation Coefficient

Global Ship  Safe Bulkers

Weak diversification

The 3 months correlation between Global and Safe is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers 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 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 Global Ship i.e., Global Ship and Safe Bulkers go up and down completely randomly.

Pair Corralation between Global Ship and Safe Bulkers

Considering the 90-day investment horizon Global Ship is expected to generate 1.86 times less return on investment than Safe Bulkers. But when comparing it to its historical volatility, Global Ship Lease is 1.92 times less risky than Safe Bulkers. It trades about 0.09 of its potential returns per unit of risk. Safe Bulkers is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  361.00  in Safe Bulkers on December 1, 2024 and sell it today you would earn a total of  13.00  from holding Safe Bulkers or generate 3.6% return on investment over 90 days.

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

Global Ship Lease  vs.  Safe Bulkers

Global Ship Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Global Ship is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Safe Bulkers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Safe Bulkers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Safe Bulkers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Ship and Safe Bulkers

The main advantage of trading using opposite Global Ship and Safe Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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 Global Ship Lease 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.