Correlation Between Grindrod Shipping and Global Ship

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

By analyzing existing cross correlation between Grindrod Shipping Holdings and Global Ship Lease, you can compare the effects of market volatilities on Grindrod Shipping and Global Ship 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 Grindrod Shipping with a short position of Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grindrod Shipping and Global Ship.

Diversification Opportunities for Grindrod Shipping and Global Ship

0.18

Correlation Coefficient

Grindrod Shipping  Global Ship

Average diversification

The 3 months correlation between Grindrod and Global is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Grindrod Shipping Holdings and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and Grindrod 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 Grindrod Shipping Holdings are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Grindrod Shipping i.e., Grindrod Shipping and Global Ship go up and down completely randomly.

Pair Corralation between Grindrod Shipping and Global Ship

Given the investment horizon of 90 days Grindrod Shipping Holdings is expected to under-perform the Global Ship. In addition to that, Grindrod Shipping is 3.46 times more volatile than Global Ship Lease. It trades about -0.03 of its total potential returns per unit of risk. Global Ship Lease is currently generating about 0.05 per unit of volatility. If you would invest  1,473  in Global Ship Lease on September 13, 2024 and sell it today you would earn a total of  703.00  from holding Global Ship Lease or generate 47.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	83.64%
Values	Daily Returns

Grindrod Shipping Holdings  vs.  Global Ship Lease

Grindrod Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grindrod Shipping Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Grindrod Shipping is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Grindrod Shipping and Global Ship

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

The idea behind Grindrod Shipping Holdings and Global Ship Lease 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.