Correlation Between Western Bulk and DAmico International

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

By analyzing existing cross correlation between Western Bulk Chartering and dAmico International Shipping, you can compare the effects of market volatilities on Western Bulk and DAmico International 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 Western Bulk with a short position of DAmico International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Bulk and DAmico International.

Diversification Opportunities for Western Bulk and DAmico International

0.92

Correlation Coefficient

Western Bulk  DAmico International

Almost no diversification

The 3 months correlation between Western and DAmico is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Western Bulk Chartering and dAmico International Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dAmico International and Western Bulk 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 Western Bulk Chartering are associated (or correlated) with DAmico International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dAmico International has no effect on the direction of Western Bulk i.e., Western Bulk and DAmico International go up and down completely randomly.

Pair Corralation between Western Bulk and DAmico International

Assuming the 90 days horizon Western Bulk Chartering is expected to generate 1.69 times more return on investment than DAmico International. However, Western Bulk is 1.69 times more volatile than dAmico International Shipping. It trades about -0.15 of its potential returns per unit of risk. dAmico International Shipping is currently generating about -0.3 per unit of risk. If you would invest  229.00  in Western Bulk Chartering on September 23, 2024 and sell it today you would lose (78.00) from holding Western Bulk Chartering or give up 34.06% of portfolio value over 90 days.

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

Western Bulk Chartering  vs.  dAmico International Shipping

Western Bulk Chartering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Bulk Chartering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

dAmico International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days dAmico International Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Western Bulk and DAmico International

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

The idea behind Western Bulk Chartering and dAmico International Shipping 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.