Correlation Between Star Bulk and SITC International
Can any of the company-specific risk be diversified away by investing in both Star Bulk and SITC 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 Star Bulk and SITC International 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 SITC International Holdings, you can compare the effects of market volatilities on Star Bulk and SITC 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 Star Bulk with a short position of SITC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Bulk and SITC International.
Diversification Opportunities for Star Bulk and SITC International
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Star and SITC is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Star Bulk Carriers and SITC International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITC International 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 SITC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITC International has no effect on the direction of Star Bulk i.e., Star Bulk and SITC International go up and down completely randomly.
Pair Corralation between Star Bulk and SITC International
Given the investment horizon of 90 days Star Bulk Carriers is expected to under-perform the SITC International. But the stock apears to be less risky and, when comparing its historical volatility, Star Bulk Carriers is 5.81 times less risky than SITC International. The stock trades about -0.07 of its potential returns per unit of risk. The SITC International Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,720 in SITC International Holdings on August 25, 2024 and sell it today you would lose (98.00) from holding SITC International Holdings or give up 3.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Star Bulk Carriers vs. SITC International Holdings
Performance |
| Timeline |
| Star Bulk Carriers |
| SITC International |
Star Bulk and SITC International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Bulk and SITC International
The main advantage of trading using opposite Star Bulk and SITC International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Bulk position performs unexpectedly, SITC 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 SITC International will offset losses from the drop in SITC International's long position.| Star Bulk vs. Genco Shipping Trading | Star Bulk vs. Diana Shipping | Star Bulk vs. Danaos | Star Bulk vs. Golden Ocean Group |
| SITC International vs. Nippon Yusen Kabushiki | SITC International vs. AP Moeller | SITC International vs. Orient Overseas Limited | SITC International vs. Western Bulk Chartering |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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