Correlation Between Caravelle International and Diana Shipping

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

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

Diversification Opportunities for Caravelle International and Diana Shipping

0.34

Correlation Coefficient

Caravelle International  Diana Shipping

Weak diversification

The 3 months correlation between Caravelle and Diana is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Caravelle International Group and Diana Shipping inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diana Shipping inc and Caravelle International 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 Caravelle International Group are associated (or correlated) with Diana Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diana Shipping inc has no effect on the direction of Caravelle International i.e., Caravelle International and Diana Shipping go up and down completely randomly.

Pair Corralation between Caravelle International and Diana Shipping

Given the investment horizon of 90 days Caravelle International Group is expected to under-perform the Diana Shipping. In addition to that, Caravelle International is 8.48 times more volatile than Diana Shipping inc. It trades about -0.31 of its total potential returns per unit of risk. Diana Shipping inc is currently generating about -0.05 per unit of volatility. If you would invest  297.00  in Diana Shipping inc on April 4, 2024 and sell it today you would lose (4.00) from holding Diana Shipping inc or give up 1.35% of portfolio value over 90 days.

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

Caravelle International Group  vs.  Diana Shipping inc

Caravelle International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caravelle International Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Diana Shipping inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Diana Shipping inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Diana Shipping is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Caravelle International and Diana Shipping

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

The idea behind Caravelle International Group and Diana Shipping inc 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.