Correlation Between United Maritime and TOP Ships

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

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

Diversification Opportunities for United Maritime and TOP Ships

-0.16

Correlation Coefficient

United Maritime  TOP Ships

Good diversification

The 3 months correlation between United and TOP is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding United Maritime and TOP Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOP Ships 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 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 United Maritime i.e., United Maritime and TOP Ships go up and down completely randomly.

Pair Corralation between United Maritime and TOP Ships

Given the investment horizon of 90 days United Maritime is expected to under-perform the TOP Ships. In addition to that, United Maritime is 1.2 times more volatile than TOP Ships. It trades about -0.09 of its total potential returns per unit of risk. TOP Ships is currently generating about 0.05 per unit of volatility. If you would invest  607.00  in TOP Ships on December 28, 2024 and sell it today you would earn a total of  37.00  from holding TOP Ships or generate 6.1% return on investment over 90 days.

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

United Maritime  vs.  TOP Ships

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.

TOP Ships

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TOP Ships are ranked lower than 4 (%) 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 United Maritime and TOP Ships

The main advantage of trading using opposite United Maritime and TOP Ships positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Maritime 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 United Maritime 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.