Correlation Between Star Bulk and Oceanpal

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

By analyzing existing cross correlation between Star Bulk Carriers and Oceanpal, you can compare the effects of market volatilities on Star Bulk and Oceanpal 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 Star Bulk with a short position of Oceanpal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Bulk and Oceanpal.

Diversification Opportunities for Star Bulk and Oceanpal

0.56

Correlation Coefficient

Star Bulk  Oceanpal

Very weak diversification

The 3 months correlation between Star and Oceanpal is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Star Bulk Carriers and Oceanpal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanpal and Star Bulk 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 Star Bulk Carriers are associated (or correlated) with Oceanpal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanpal has no effect on the direction of Star Bulk i.e., Star Bulk and Oceanpal go up and down completely randomly.

Pair Corralation between Star Bulk and Oceanpal

Given the investment horizon of 90 days Star Bulk Carriers is expected to under-perform the Oceanpal. But the stock apears to be less risky and, when comparing its historical volatility, Star Bulk Carriers is 1.35 times less risky than Oceanpal. The stock trades about -0.2 of its potential returns per unit of risk. The Oceanpal is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  153.00  in Oceanpal on September 13, 2024 and sell it today you would lose (13.00) from holding Oceanpal or give up 8.5% of portfolio value over 90 days.

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

Star Bulk Carriers  vs.  Oceanpal

Star Bulk Carriers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Bulk Carriers 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.

Oceanpal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oceanpal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Star Bulk and Oceanpal

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

The idea behind Star Bulk Carriers and Oceanpal 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.