Correlation Between SITC International and Safe Bulkers

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

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

Diversification Opportunities for SITC International and Safe Bulkers

0.39

Correlation Coefficient

SITC International  Safe Bulkers

Weak diversification

The 3 months correlation between SITC and Safe is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SITC International Holdings and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers and SITC International 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 SITC International Holdings 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 SITC International i.e., SITC International and Safe Bulkers go up and down completely randomly.

Pair Corralation between SITC International and Safe Bulkers

Assuming the 90 days horizon SITC International Holdings is expected to generate 6.56 times more return on investment than Safe Bulkers. However, SITC International is 6.56 times more volatile than Safe Bulkers. It trades about 0.06 of its potential returns per unit of risk. Safe Bulkers is currently generating about 0.09 per unit of risk. If you would invest  227.00  in SITC International Holdings on September 14, 2024 and sell it today you would earn a total of  24.00  from holding SITC International Holdings or generate 10.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

SITC International Holdings  vs.  Safe Bulkers

SITC International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SITC International Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, SITC International reported solid returns over the last few months and may actually be approaching a breakup point.

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 SITC International and Safe Bulkers

The main advantage of trading using opposite SITC International and Safe Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SITC International 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 SITC International Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.