Correlation Between Western Bulk and Hapag Lloyd

Can any of the company-specific risk be diversified away by investing in both Western Bulk and Hapag Lloyd 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 Hapag Lloyd 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 Hapag Lloyd Aktiengesellschaft, you can compare the effects of market volatilities on Western Bulk and Hapag Lloyd 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 Hapag Lloyd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Bulk and Hapag Lloyd.

Diversification Opportunities for Western Bulk and Hapag Lloyd

0.39

Correlation Coefficient

Western Bulk  Hapag Lloyd

Weak diversification

The 3 months correlation between Western and Hapag is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Western Bulk Chartering and Hapag Lloyd Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hapag Lloyd Aktienge 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 Hapag Lloyd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hapag Lloyd Aktienge has no effect on the direction of Western Bulk i.e., Western Bulk and Hapag Lloyd go up and down completely randomly.

Pair Corralation between Western Bulk and Hapag Lloyd

Assuming the 90 days horizon Western Bulk Chartering is expected to under-perform the Hapag Lloyd. But the pink sheet apears to be less risky and, when comparing its historical volatility, Western Bulk Chartering is 1.03 times less risky than Hapag Lloyd. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Hapag Lloyd Aktiengesellschaft is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  7,875  in Hapag Lloyd Aktiengesellschaft on December 20, 2024 and sell it today you would lose (519.00) from holding Hapag Lloyd Aktiengesellschaft or give up 6.59% of portfolio value over 90 days.

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

Western Bulk Chartering  vs.  Hapag Lloyd Aktiengesellschaft

Western Bulk Chartering

Risk-Adjusted Performance

Very Weak

Over the last 90 days Western Bulk Chartering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Hapag Lloyd Aktienge

Risk-Adjusted Performance

Weak

Over the last 90 days Hapag Lloyd Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Hapag Lloyd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Western Bulk and Hapag Lloyd

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

The idea behind Western Bulk Chartering and Hapag Lloyd Aktiengesellschaft 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.