Correlation Between Pacific Basin and Genco Shipping

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

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

Diversification Opportunities for Pacific Basin and Genco Shipping

0.51

Correlation Coefficient

Pacific Basin  Genco Shipping

Very weak diversification

The 3 months correlation between Pacific and Genco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading and Pacific Basin 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 Pacific Basin Shipping are associated (or correlated) with Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of Pacific Basin i.e., Pacific Basin and Genco Shipping go up and down completely randomly.

Pair Corralation between Pacific Basin and Genco Shipping

Assuming the 90 days horizon Pacific Basin Shipping is expected to under-perform the Genco Shipping. In addition to that, Pacific Basin is 1.77 times more volatile than Genco Shipping Trading. It trades about -0.11 of its total potential returns per unit of risk. Genco Shipping Trading is currently generating about -0.1 per unit of volatility. If you would invest  1,530  in Genco Shipping Trading on September 26, 2024 and sell it today you would lose (124.00) from holding Genco Shipping Trading or give up 8.1% of portfolio value over 90 days.

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

Pacific Basin Shipping  vs.  Genco Shipping Trading

Pacific Basin Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Basin Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Genco Shipping Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genco Shipping Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting 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.

Pair Trading with Pacific Basin and Genco Shipping

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

The idea behind Pacific Basin Shipping and Genco Shipping Trading 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.