Correlation Between EuroDry and DAmico International

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

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

Diversification Opportunities for EuroDry and DAmico International

0.98

Correlation Coefficient

EuroDry  DAmico International

Almost no diversification

The 3 months correlation between EuroDry and DAmico is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding EuroDry and dAmico International Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dAmico International and EuroDry 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 EuroDry are associated (or correlated) with DAmico International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dAmico International has no effect on the direction of EuroDry i.e., EuroDry and DAmico International go up and down completely randomly.

Pair Corralation between EuroDry and DAmico International

Given the investment horizon of 90 days EuroDry is expected to under-perform the DAmico International. But the stock apears to be less risky and, when comparing its historical volatility, EuroDry is 1.16 times less risky than DAmico International. The stock trades about -0.34 of its potential returns per unit of risk. The dAmico International Shipping is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  593.00  in dAmico International Shipping on September 12, 2024 and sell it today you would lose (158.00) from holding dAmico International Shipping or give up 26.64% of portfolio value over 90 days.

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

EuroDry  vs.  dAmico International Shipping

EuroDry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EuroDry 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.

dAmico International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EuroDry and DAmico International

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

The idea behind EuroDry and dAmico International Shipping 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 CEOs Directory module to screen CEOs from public companies around the world.