Correlation Between Overseas Shipholding and International Seaways

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

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

Diversification Opportunities for Overseas Shipholding and International Seaways

-0.8

Correlation Coefficient

Overseas Shipholding  International Seaways

Pay attention - limited upside

The 3 months correlation between Overseas and International is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Overseas Shipholding Group and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways and Overseas Shipholding 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 Overseas Shipholding Group are associated (or correlated) with International Seaways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Seaways has no effect on the direction of Overseas Shipholding i.e., Overseas Shipholding and International Seaways go up and down completely randomly.

Pair Corralation between Overseas Shipholding and International Seaways

Considering the 90-day investment horizon Overseas Shipholding Group is expected to generate 1.13 times more return on investment than International Seaways. However, Overseas Shipholding is 1.13 times more volatile than International Seaways. It trades about 0.11 of its potential returns per unit of risk. International Seaways is currently generating about 0.03 per unit of risk. If you would invest  365.00  in Overseas Shipholding Group on October 22, 2024 and sell it today you would earn a total of  484.00  from holding Overseas Shipholding Group or generate 132.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	72.98%
Values	Daily Returns

Overseas Shipholding Group  vs.  International Seaways

Overseas Shipholding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Overseas Shipholding Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Overseas Shipholding is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

International Seaways

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Seaways has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Overseas Shipholding and International Seaways

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

The idea behind Overseas Shipholding Group and International Seaways 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.