Correlation Between United Maritime and Genco Shipping

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

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

Diversification Opportunities for United Maritime and Genco Shipping

0.61

Correlation Coefficient

United Maritime  Genco Shipping

Poor diversification

The 3 months correlation between United and Genco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Maritime and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading and United Maritime 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 United Maritime are associated (or correlated) with Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of United Maritime i.e., United Maritime and Genco Shipping go up and down completely randomly.

Pair Corralation between United Maritime and Genco Shipping

Given the investment horizon of 90 days United Maritime is expected to under-perform the Genco Shipping. In addition to that, United Maritime is 1.55 times more volatile than Genco Shipping Trading. It trades about -0.09 of its total potential returns per unit of risk. Genco Shipping Trading is currently generating about -0.02 per unit of volatility. If you would invest  1,353  in Genco Shipping Trading on December 28, 2024 and sell it today you would lose (37.00) from holding Genco Shipping Trading or give up 2.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

United Maritime  vs.  Genco Shipping Trading

United Maritime

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Genco Shipping Trading

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genco Shipping Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Genco Shipping is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with United Maritime and Genco Shipping

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

The idea behind United Maritime and Genco Shipping Trading 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.