Correlation Between Kirby and Euroseas

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

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

Diversification Opportunities for Kirby and Euroseas

0.24

Correlation Coefficient

Kirby  Euroseas

Modest diversification

The 3 months correlation between Kirby and Euroseas is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kirby and Euroseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euroseas and Kirby 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 Kirby are associated (or correlated) with Euroseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euroseas has no effect on the direction of Kirby i.e., Kirby and Euroseas go up and down completely randomly.

Pair Corralation between Kirby and Euroseas

Considering the 90-day investment horizon Kirby is expected to generate about the same return on investment as Euroseas. But, Kirby is 2.19 times less risky than Euroseas. It trades about -0.04 of its potential returns per unit of risk. Euroseas is currently generating about -0.02 per unit of risk. If you would invest  3,346  in Euroseas on December 28, 2024 and sell it today you would lose (274.00) from holding Euroseas or give up 8.19% of portfolio value over 90 days.

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

Kirby  vs.  Euroseas

Kirby

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kirby has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Kirby is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Euroseas

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kirby and Euroseas

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

The idea behind Kirby and Euroseas 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.