Correlation Between Western Bulk and Orient Overseas
Can any of the company-specific risk be diversified away by investing in both Western Bulk and Orient Overseas 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 Orient Overseas 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 Orient Overseas International, you can compare the effects of market volatilities on Western Bulk and Orient Overseas 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 Orient Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Bulk and Orient Overseas.
Diversification Opportunities for Western Bulk and Orient Overseas
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Orient is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Western Bulk Chartering and Orient Overseas International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas Inte 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 Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas Inte has no effect on the direction of Western Bulk i.e., Western Bulk and Orient Overseas go up and down completely randomly.
Pair Corralation between Western Bulk and Orient Overseas
Assuming the 90 days horizon Western Bulk Chartering is expected to under-perform the Orient Overseas. In addition to that, Western Bulk is 3.55 times more volatile than Orient Overseas International. It trades about -0.26 of its total potential returns per unit of risk. Orient Overseas International is currently generating about 0.0 per unit of volatility. If you would invest 7,231 in Orient Overseas International on August 27, 2024 and sell it today you would lose (31.00) from holding Orient Overseas International or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Bulk Chartering vs. Orient Overseas International
Performance |
| Timeline |
| Western Bulk Chartering |
| Orient Overseas Inte |
Western Bulk and Orient Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Bulk and Orient Overseas
The main advantage of trading using opposite Western Bulk and Orient Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Bulk position performs unexpectedly, Orient Overseas 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 Orient Overseas will offset losses from the drop in Orient Overseas' long position.| Western Bulk vs. AP Mller | Western Bulk vs. COSCO SHIPPING Holdings | Western Bulk vs. Orient Overseas Limited |
| Orient Overseas vs. AP Mller | Orient Overseas vs. COSCO SHIPPING Holdings | Orient Overseas vs. Orient Overseas Limited |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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