Correlation Between ADS Maritime and Black Sea

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

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

Diversification Opportunities for ADS Maritime and Black Sea

0.14

Correlation Coefficient

ADS Maritime  Black Sea

Average diversification

The 3 months correlation between ADS and Black is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ADS Maritime Holding and Black Sea Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Sea Property and ADS 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 ADS Maritime Holding are associated (or correlated) with Black Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Sea Property has no effect on the direction of ADS Maritime i.e., ADS Maritime and Black Sea go up and down completely randomly.

Pair Corralation between ADS Maritime and Black Sea

Assuming the 90 days trading horizon ADS Maritime Holding is expected to under-perform the Black Sea. But the stock apears to be less risky and, when comparing its historical volatility, ADS Maritime Holding is 29.43 times less risky than Black Sea. The stock trades about -0.01 of its potential returns per unit of risk. The Black Sea Property is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Black Sea Property on September 16, 2024 and sell it today you would lose (4.00) from holding Black Sea Property or give up 23.53% of portfolio value over 90 days.

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

ADS Maritime Holding  vs.  Black Sea Property

ADS Maritime Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Black Sea Property

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Black Sea Property are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Black Sea disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADS Maritime and Black Sea

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

The idea behind ADS Maritime Holding and Black Sea Property 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.