Correlation Between Orient Overseas and Safe Bulkers

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

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

Diversification Opportunities for Orient Overseas and Safe Bulkers

-0.38

Correlation Coefficient

Orient Overseas  Safe Bulkers

Very good diversification

The 3 months correlation between Orient and Safe is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Orient Overseas Limited and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers and Orient Overseas 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 Orient Overseas Limited are associated (or correlated) with Safe Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Bulkers has no effect on the direction of Orient Overseas i.e., Orient Overseas and Safe Bulkers go up and down completely randomly.

Pair Corralation between Orient Overseas and Safe Bulkers

Assuming the 90 days horizon Orient Overseas Limited is expected to generate 6.9 times more return on investment than Safe Bulkers. However, Orient Overseas is 6.9 times more volatile than Safe Bulkers. It trades about 0.03 of its potential returns per unit of risk. Safe Bulkers is currently generating about 0.09 per unit of risk. If you would invest  1,116  in Orient Overseas Limited on September 14, 2024 and sell it today you would earn a total of  129.00  from holding Orient Overseas Limited or generate 11.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.8%
Values	Daily Returns

Orient Overseas Limited  vs.  Safe Bulkers

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 weak 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.

Safe Bulkers

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Safe Bulkers is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Orient Overseas and Safe Bulkers

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

The idea behind Orient Overseas Limited and Safe Bulkers 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.