Correlation Between Safe Bulkers and Global Ship

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

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

Diversification Opportunities for Safe Bulkers and Global Ship

0.8

Correlation Coefficient

Safe Bulkers  Global Ship

Very poor diversification

The 3 months correlation between Safe and Global is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers 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 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 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 Safe Bulkers i.e., Safe Bulkers and Global Ship go up and down completely randomly.

Pair Corralation between Safe Bulkers and Global Ship

Allowing for the 90-day total investment horizon Safe Bulkers is expected to generate 1.16 times more return on investment than Global Ship. However, Safe Bulkers is 1.16 times more volatile than Global Ship Lease. It trades about 0.05 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.05 per unit of risk. If you would invest  257.00  in Safe Bulkers on September 4, 2024 and sell it today you would earn a total of  124.00  from holding Safe Bulkers or generate 48.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Safe Bulkers  vs.  Global Ship Lease

Safe Bulkers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe Bulkers 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 fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company 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 quite persistent basic indicators, Global Ship is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Safe Bulkers and Global Ship

The main advantage of trading using opposite Safe Bulkers and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe Bulkers 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 Safe Bulkers 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 Transaction History module to view history of all your transactions and understand their impact on performance.