Correlation Between Star Bulk and TOP Ships

Can any of the company-specific risk be diversified away by investing in both Star Bulk and TOP Ships 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 TOP Ships 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 TOP Ships, you can compare the effects of market volatilities on Star Bulk and TOP Ships 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 TOP Ships. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Bulk and TOP Ships.

Diversification Opportunities for Star Bulk and TOP Ships

-0.38

Correlation Coefficient

Star Bulk  TOP Ships

Very good diversification

The 3 months correlation between Star and TOP is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Star Bulk Carriers and TOP Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOP Ships 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 TOP Ships. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOP Ships has no effect on the direction of Star Bulk i.e., Star Bulk and TOP Ships go up and down completely randomly.

Pair Corralation between Star Bulk and TOP Ships

Given the investment horizon of 90 days Star Bulk Carriers is expected to generate 0.96 times more return on investment than TOP Ships. However, Star Bulk Carriers is 1.04 times less risky than TOP Ships. It trades about 0.07 of its potential returns per unit of risk. TOP Ships is currently generating about 0.05 per unit of risk. If you would invest  1,476  in Star Bulk Carriers on December 27, 2024 and sell it today you would earn a total of  136.00  from holding Star Bulk Carriers or generate 9.21% return on investment over 90 days.

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

Star Bulk Carriers  vs.  TOP Ships

Star Bulk Carriers

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Star Bulk Carriers are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Star Bulk may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TOP Ships

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TOP Ships are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, TOP Ships may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Star Bulk and TOP Ships

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

The idea behind Star Bulk Carriers and TOP Ships 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.