Correlation Between Genco Shipping and Orient Overseas

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

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

Diversification Opportunities for Genco Shipping and Orient Overseas

0.69

Correlation Coefficient

Genco Shipping  Orient Overseas

Poor diversification

The 3 months correlation between Genco and Orient is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Genco Shipping Trading and Orient Overseas Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas and Genco 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 Genco Shipping Trading are associated (or correlated) with Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas has no effect on the direction of Genco Shipping i.e., Genco Shipping and Orient Overseas go up and down completely randomly.

Pair Corralation between Genco Shipping and Orient Overseas

Considering the 90-day investment horizon Genco Shipping Trading is expected to under-perform the Orient Overseas. In addition to that, Genco Shipping is 1.06 times more volatile than Orient Overseas Limited. It trades about -0.43 of its total potential returns per unit of risk. Orient Overseas Limited is currently generating about -0.3 per unit of volatility. If you would invest  1,396  in Orient Overseas Limited on September 15, 2024 and sell it today you would lose (151.00) from holding Orient Overseas Limited or give up 10.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Genco Shipping Trading  vs.  Orient Overseas Limited

Genco Shipping Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genco Shipping Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Orient Overseas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orient Overseas Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Genco Shipping and Orient Overseas

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

The idea behind Genco Shipping Trading and Orient Overseas Limited 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.