Correlation Between TOP Ships and Kirby

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

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

Diversification Opportunities for TOP Ships and Kirby

-0.15

Correlation Coefficient

TOP Ships  Kirby

Good diversification

The 3 months correlation between TOP and Kirby is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding TOP Ships and Kirby in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirby and TOP Ships 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 TOP Ships are associated (or correlated) with Kirby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirby has no effect on the direction of TOP Ships i.e., TOP Ships and Kirby go up and down completely randomly.

Pair Corralation between TOP Ships and Kirby

Given the investment horizon of 90 days TOP Ships is expected to under-perform the Kirby. In addition to that, TOP Ships is 1.31 times more volatile than Kirby. It trades about -0.13 of its total potential returns per unit of risk. Kirby is currently generating about 0.12 per unit of volatility. If you would invest  7,394  in Kirby on September 4, 2024 and sell it today you would earn a total of  4,944  from holding Kirby or generate 66.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

TOP Ships  vs.  Kirby

TOP Ships

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOP Ships has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TOP Ships is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Kirby

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kirby are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Kirby may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TOP Ships and Kirby

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

The idea behind TOP Ships and Kirby 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.