Correlation Between Western Bulk and HydrogenPro

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

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

Diversification Opportunities for Western Bulk and HydrogenPro

0.53

Correlation Coefficient

Western Bulk  HydrogenPro

Very weak diversification

The 3 months correlation between Western and HydrogenPro is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Western Bulk Chartering and HydrogenPro AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HydrogenPro AS and Western 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 Western Bulk Chartering are associated (or correlated) with HydrogenPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HydrogenPro AS has no effect on the direction of Western Bulk i.e., Western Bulk and HydrogenPro go up and down completely randomly.

Pair Corralation between Western Bulk and HydrogenPro

Assuming the 90 days trading horizon Western Bulk Chartering is expected to generate 1.12 times more return on investment than HydrogenPro. However, Western Bulk is 1.12 times more volatile than HydrogenPro AS. It trades about 0.02 of its potential returns per unit of risk. HydrogenPro AS is currently generating about -0.02 per unit of risk. If you would invest  1,360  in Western Bulk Chartering on December 30, 2024 and sell it today you would earn a total of  15.00  from holding Western Bulk Chartering or generate 1.1% return on investment over 90 days.

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

Western Bulk Chartering  vs.  HydrogenPro AS

Western Bulk Chartering

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Bulk Chartering are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Western Bulk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

HydrogenPro AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days HydrogenPro AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HydrogenPro is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Western Bulk and HydrogenPro

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

The idea behind Western Bulk Chartering and HydrogenPro AS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.