Correlation Between Globus Maritime and United Maritime

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

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

Diversification Opportunities for Globus Maritime and United Maritime

0.72

Correlation Coefficient

Globus Maritime  United Maritime

Poor diversification

The 3 months correlation between Globus and United is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Globus Maritime and United Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Maritime 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 United Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Maritime has no effect on the direction of Globus Maritime i.e., Globus Maritime and United Maritime go up and down completely randomly.

Pair Corralation between Globus Maritime and United Maritime

Given the investment horizon of 90 days Globus Maritime is expected to generate 2.09 times more return on investment than United Maritime. However, Globus Maritime is 2.09 times more volatile than United Maritime. It trades about 0.03 of its potential returns per unit of risk. United Maritime is currently generating about -0.15 per unit of risk. If you would invest  155.00  in Globus Maritime on September 3, 2024 and sell it today you would earn a total of  5.00  from holding Globus Maritime or generate 3.23% return on investment over 90 days.

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

Globus Maritime  vs.  United Maritime

Globus Maritime

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globus Maritime are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental drivers, Globus Maritime may actually be approaching a critical reversion point that can send shares even higher in January 2025.

United Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat 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.

Pair Trading with Globus Maritime and United Maritime

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

The idea behind Globus Maritime and United Maritime 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.