Correlation Between Golden Energy and ADS Maritime

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

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

Diversification Opportunities for Golden Energy and ADS Maritime

0.22

Correlation Coefficient

Golden Energy  ADS Maritime

Modest diversification

The 3 months correlation between Golden and ADS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Golden Energy Offshore and ADS Maritime Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADS Maritime Holding and Golden Energy 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 Golden Energy Offshore are associated (or correlated) with ADS Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADS Maritime Holding has no effect on the direction of Golden Energy i.e., Golden Energy and ADS Maritime go up and down completely randomly.

Pair Corralation between Golden Energy and ADS Maritime

Assuming the 90 days trading horizon Golden Energy Offshore is expected to under-perform the ADS Maritime. In addition to that, Golden Energy is 2.67 times more volatile than ADS Maritime Holding. It trades about -0.02 of its total potential returns per unit of risk. ADS Maritime Holding is currently generating about -0.01 per unit of volatility. If you would invest  197.00  in ADS Maritime Holding on September 16, 2024 and sell it today you would lose (5.00) from holding ADS Maritime Holding or give up 2.54% of portfolio value over 90 days.

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

Golden Energy Offshore  vs.  ADS Maritime Holding

Golden Energy Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Energy Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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.

Pair Trading with Golden Energy and ADS Maritime

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

The idea behind Golden Energy Offshore and ADS Maritime Holding 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.