Correlation Between Diana Shipping and Cool

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

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

Diversification Opportunities for Diana Shipping and Cool

0.9

Correlation Coefficient

Diana Shipping  Cool

Almost no diversification

The 3 months correlation between Diana and Cool is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Diana Shipping and Cool Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cool Company and Diana Shipping 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 Diana Shipping are associated (or correlated) with Cool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cool Company has no effect on the direction of Diana Shipping i.e., Diana Shipping and Cool go up and down completely randomly.

Pair Corralation between Diana Shipping and Cool

Considering the 90-day investment horizon Diana Shipping is expected to generate 1.06 times more return on investment than Cool. However, Diana Shipping is 1.06 times more volatile than Cool Company. It trades about -0.12 of its potential returns per unit of risk. Cool Company is currently generating about -0.22 per unit of risk. If you would invest  245.00  in Diana Shipping on September 4, 2024 and sell it today you would lose (54.00) from holding Diana Shipping or give up 22.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Diana Shipping  vs.  Cool Company

Diana Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diana Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cool Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cool Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Diana Shipping and Cool

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

The idea behind Diana Shipping and Cool Company 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.