Correlation Between TOP Ships and Star Bulk

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

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

Diversification Opportunities for TOP Ships and Star Bulk

-0.38

Correlation Coefficient

TOP Ships  Star Bulk

Very good diversification

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

Pair Corralation between TOP Ships and Star Bulk

Given the investment horizon of 90 days TOP Ships is expected to generate 1.57 times less return on investment than Star Bulk. In addition to that, TOP Ships is 1.04 times more volatile than Star Bulk Carriers. It trades about 0.05 of its total potential returns per unit of risk. Star Bulk Carriers is currently generating about 0.07 per unit of volatility. 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

TOP Ships  vs.  Star Bulk Carriers

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.

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.

Pair Trading with TOP Ships and Star Bulk

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

The idea behind TOP Ships and Star Bulk Carriers 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 CEOs Directory module to screen CEOs from public companies around the world.