Correlation Between Overseas Shipholding and Frontline

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

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

Diversification Opportunities for Overseas Shipholding and Frontline

-0.7

Correlation Coefficient

Overseas Shipholding  Frontline

Excellent diversification

The 3 months correlation between Overseas and Frontline is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Overseas Shipholding Group and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline and Overseas Shipholding 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 Overseas Shipholding Group are associated (or correlated) with Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of Overseas Shipholding i.e., Overseas Shipholding and Frontline go up and down completely randomly.

Pair Corralation between Overseas Shipholding and Frontline

If you would invest  849.00  in Overseas Shipholding Group on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Overseas Shipholding Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Overseas Shipholding Group  vs.  Frontline

Overseas Shipholding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Overseas Shipholding Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Overseas Shipholding is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Frontline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontline has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Overseas Shipholding and Frontline

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

The idea behind Overseas Shipholding Group and Frontline 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.