Correlation Between Star Bulk and Kirby
Can any of the company-specific risk be diversified away by investing in both Star Bulk and Kirby 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 Star Bulk and Kirby into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Bulk Carriers and Kirby, you can compare the effects of market volatilities on Star Bulk and Kirby 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 Star Bulk with a short position of Kirby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Bulk and Kirby.
Diversification Opportunities for Star Bulk and Kirby
Very poor diversification
The 3 months correlation between Star and Kirby is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Star Bulk Carriers and Kirby in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirby and Star 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 Star Bulk Carriers are associated (or correlated) with Kirby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirby has no effect on the direction of Star Bulk i.e., Star Bulk and Kirby go up and down completely randomly.
Pair Corralation between Star Bulk and Kirby
Given the investment horizon of 90 days Star Bulk is expected to generate 9.91 times less return on investment than Kirby. But when comparing it to its historical volatility, Star Bulk Carriers is 1.01 times less risky than Kirby. It trades about 0.02 of its potential returns per unit of risk. Kirby is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 10,497 in Kirby on November 2, 2024 and sell it today you would earn a total of 715.00 from holding Kirby or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Star Bulk Carriers vs. Kirby
Performance |
| Timeline |
| Star Bulk Carriers |
| Kirby |
Star Bulk and Kirby Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Bulk and Kirby
The main advantage of trading using opposite Star Bulk and Kirby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Bulk position performs unexpectedly, Kirby 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 Kirby will offset losses from the drop in Kirby's long position.| Star Bulk vs. Genco Shipping Trading | Star Bulk vs. Diana Shipping | Star Bulk vs. Danaos | Star Bulk vs. Golden Ocean Group |
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.
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