Correlation Between United Maritime and Oceanpal

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

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

Diversification Opportunities for United Maritime and Oceanpal

0.67

Correlation Coefficient

United Maritime  Oceanpal

Poor diversification

The 3 months correlation between United and Oceanpal is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Maritime and Oceanpal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanpal and United Maritime 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 United Maritime are associated (or correlated) with Oceanpal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanpal has no effect on the direction of United Maritime i.e., United Maritime and Oceanpal go up and down completely randomly.

Pair Corralation between United Maritime and Oceanpal

Given the investment horizon of 90 days United Maritime is expected to generate 5.2 times less return on investment than Oceanpal. But when comparing it to its historical volatility, United Maritime is 2.26 times less risky than Oceanpal. It trades about 0.01 of its potential returns per unit of risk. Oceanpal is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  163.00  in Oceanpal on September 12, 2024 and sell it today you would lose (22.00) from holding Oceanpal or give up 13.5% of portfolio value over 90 days.

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

United Maritime  vs.  Oceanpal

United Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators 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.

Oceanpal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oceanpal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Oceanpal is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with United Maritime and Oceanpal

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

The idea behind United Maritime and Oceanpal 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.