Correlation Between Safe Bulkers and Golden Ocean

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

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

Diversification Opportunities for Safe Bulkers and Golden Ocean

-0.14

Correlation Coefficient

Safe Bulkers  Golden Ocean

Good diversification

The 3 months correlation between Safe and Golden is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers 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 Safe Bulkers 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 Safe Bulkers 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 Safe Bulkers i.e., Safe Bulkers and Golden Ocean go up and down completely randomly.

Pair Corralation between Safe Bulkers and Golden Ocean

Assuming the 90 days horizon Safe Bulkers is expected to generate 0.32 times more return on investment than Golden Ocean. However, Safe Bulkers is 3.11 times less risky than Golden Ocean. It trades about 0.02 of its potential returns per unit of risk. Golden Ocean Group is currently generating about -0.21 per unit of risk. If you would invest  2,536  in Safe Bulkers on October 9, 2024 and sell it today you would earn a total of  14.00  from holding Safe Bulkers or generate 0.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Safe Bulkers  vs.  Golden Ocean Group

Safe Bulkers

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Safe Bulkers is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Safe Bulkers and Golden Ocean

The main advantage of trading using opposite Safe Bulkers and Golden Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe Bulkers 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 Safe Bulkers 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.