Correlation Between Prosafe SE and Golden Ocean

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

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

Diversification Opportunities for Prosafe SE and Golden Ocean

0.61

Correlation Coefficient

Prosafe SE  Golden Ocean

Poor diversification

The 3 months correlation between Prosafe and Golden is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and Golden Ocean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ocean Group and Prosafe SE 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 Prosafe SE are associated (or correlated) with Golden Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ocean Group has no effect on the direction of Prosafe SE i.e., Prosafe SE and Golden Ocean go up and down completely randomly.

Pair Corralation between Prosafe SE and Golden Ocean

Assuming the 90 days trading horizon Prosafe SE is expected to under-perform the Golden Ocean. In addition to that, Prosafe SE is 3.28 times more volatile than Golden Ocean Group. It trades about -0.25 of its total potential returns per unit of risk. Golden Ocean Group is currently generating about -0.1 per unit of volatility. If you would invest  12,003  in Golden Ocean Group on September 12, 2024 and sell it today you would lose (1,793) from holding Golden Ocean Group or give up 14.94% of portfolio value over 90 days.

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

Prosafe SE  vs.  Golden Ocean Group

Prosafe SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosafe SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Golden Ocean Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Ocean Group 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 essential 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 Prosafe SE and Golden Ocean

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

The idea behind Prosafe SE and Golden Ocean Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.