Correlation Between Safe Bulkers and StealthGas

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

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

Diversification Opportunities for Safe Bulkers and StealthGas

-0.62

Correlation Coefficient

Safe Bulkers  StealthGas

Excellent diversification

The 3 months correlation between Safe and StealthGas is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and StealthGas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StealthGas and Safe Bulkers 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 Safe Bulkers are associated (or correlated) with StealthGas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StealthGas has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and StealthGas go up and down completely randomly.

Pair Corralation between Safe Bulkers and StealthGas

Assuming the 90 days horizon Safe Bulkers is expected to generate 2.49 times less return on investment than StealthGas. But when comparing it to its historical volatility, Safe Bulkers is 1.21 times less risky than StealthGas. It trades about 0.03 of its potential returns per unit of risk. StealthGas is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  284.00  in StealthGas on September 4, 2024 and sell it today you would earn a total of  258.00  from holding StealthGas or generate 90.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.32%
Values	Daily Returns

Safe Bulkers  vs.  StealthGas

Safe Bulkers

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Bulkers are ranked lower than 10 (%) 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.

StealthGas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StealthGas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, StealthGas is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Safe Bulkers and StealthGas

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

The idea behind Safe Bulkers and StealthGas 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.