Correlation Between Safe Bulkers and ZIM Integrated

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

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

Diversification Opportunities for Safe Bulkers and ZIM Integrated

0.3

Correlation Coefficient

Safe Bulkers  ZIM Integrated

Weak diversification

The 3 months correlation between Safe and ZIM is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping 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 ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and ZIM Integrated go up and down completely randomly.

Pair Corralation between Safe Bulkers and ZIM Integrated

Assuming the 90 days horizon Safe Bulkers is expected to generate 6.34 times less return on investment than ZIM Integrated. But when comparing it to its historical volatility, Safe Bulkers is 8.61 times less risky than ZIM Integrated. It trades about 0.08 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in ZIM Integrated Shipping on October 10, 2024 and sell it today you would earn a total of  1,151  from holding ZIM Integrated Shipping or generate 115.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.79%
Values	Daily Returns

Safe Bulkers  vs.  ZIM Integrated Shipping

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.

ZIM Integrated Shipping

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZIM Integrated Shipping are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward indicators, ZIM Integrated displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Safe Bulkers and ZIM Integrated

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

The idea behind Safe Bulkers and ZIM Integrated Shipping 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.