Correlation Between Globus Maritime and Euroseas

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

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

Diversification Opportunities for Globus Maritime and Euroseas

0.76

Correlation Coefficient

Globus Maritime  Euroseas

Poor diversification

The 3 months correlation between Globus and Euroseas is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Globus Maritime and Euroseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euroseas and Globus 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 Globus Maritime are associated (or correlated) with Euroseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euroseas has no effect on the direction of Globus Maritime i.e., Globus Maritime and Euroseas go up and down completely randomly.

Pair Corralation between Globus Maritime and Euroseas

Given the investment horizon of 90 days Globus Maritime is expected to generate 1.5 times more return on investment than Euroseas. However, Globus Maritime is 1.5 times more volatile than Euroseas. It trades about 0.01 of its potential returns per unit of risk. Euroseas is currently generating about -0.03 per unit of risk. If you would invest  150.00  in Globus Maritime on September 4, 2024 and sell it today you would lose (2.00) from holding Globus Maritime or give up 1.33% of portfolio value over 90 days.

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

Globus Maritime  vs.  Euroseas

Globus Maritime

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globus Maritime are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Globus Maritime is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Euroseas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euroseas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Euroseas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Globus Maritime and Euroseas

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

The idea behind Globus Maritime and Euroseas 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.