Correlation Between Global Ship and Ring Energy
Can any of the company-specific risk be diversified away by investing in both Global Ship and Ring Energy 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 Global Ship and Ring Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and Ring Energy, you can compare the effects of market volatilities on Global Ship and Ring Energy 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 Global Ship with a short position of Ring Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Ring Energy.
Diversification Opportunities for Global Ship and Ring Energy
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and Ring is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Ring Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ring Energy and Global Ship 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 Global Ship Lease are associated (or correlated) with Ring Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ring Energy has no effect on the direction of Global Ship i.e., Global Ship and Ring Energy go up and down completely randomly.
Pair Corralation between Global Ship and Ring Energy
Assuming the 90 days horizon Global Ship Lease is expected to generate 0.55 times more return on investment than Ring Energy. However, Global Ship Lease is 1.82 times less risky than Ring Energy. It trades about 0.07 of its potential returns per unit of risk. Ring Energy is currently generating about 0.02 per unit of risk. If you would invest 1,563 in Global Ship Lease on September 3, 2024 and sell it today you would earn a total of 469.00 from holding Global Ship Lease or generate 30.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Ring Energy
Performance |
| Timeline |
| Global Ship Lease |
| Ring Energy |
Global Ship and Ring Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Ring Energy
The main advantage of trading using opposite Global Ship and Ring Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Ring Energy 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 Ring Energy will offset losses from the drop in Ring Energy's long position.| Global Ship vs. BW LPG Limited | Global Ship vs. Wilh Wilhelmsen Holding | Global Ship vs. Superior Plus Corp | Global Ship vs. NMI Holdings |
| Ring Energy vs. Ribbon Communications | Ring Energy vs. Host Hotels Resorts | Ring Energy vs. Park Hotels Resorts | Ring Energy vs. Wyndham Hotels Resorts |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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