Correlation Between Safe Bulkers and Global Ship

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

By analyzing existing cross correlation between Safe Bulkers and Global Ship Lease, you can compare the effects of market volatilities on Safe Bulkers and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safe Bulkers and Global Ship.

Diversification Opportunities for Safe Bulkers and Global Ship

0.33

Correlation Coefficient

Safe Bulkers  Global Ship

Weak diversification

The 3 months correlation between Safe and Global is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and Global Ship go up and down completely randomly.

Pair Corralation between Safe Bulkers and Global Ship

Assuming the 90 days horizon Safe Bulkers is expected to generate 2.95 times less return on investment than Global Ship. But when comparing it to its historical volatility, Safe Bulkers is 3.56 times less risky than Global Ship. It trades about 0.09 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,127  in Global Ship Lease on December 28, 2024 and sell it today you would earn a total of  162.00  from holding Global Ship Lease or generate 7.62% return on investment over 90 days.

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

Safe Bulkers  vs.  Global Ship Lease

Safe Bulkers

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 7 (%) 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.

Global Ship Lease

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Global Ship may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Safe Bulkers and Global Ship

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

The idea behind Safe Bulkers and Global Ship Lease 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.