Correlation Between Overseas Shipholding and Balancer

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Can any of the company-specific risk be diversified away by investing in both Overseas Shipholding and Balancer 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 Overseas Shipholding and Balancer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Overseas Shipholding Group and Balancer, you can compare the effects of market volatilities on Overseas Shipholding and Balancer 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 Overseas Shipholding with a short position of Balancer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overseas Shipholding and Balancer.

Diversification Opportunities for Overseas Shipholding and Balancer

  Correlation Coefficient

Modest diversification

The 3 months correlation between Overseas and Balancer is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Overseas Shipholding Group and Balancer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balancer and Overseas Shipholding 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 Overseas Shipholding Group are associated (or correlated) with Balancer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balancer has no effect on the direction of Overseas Shipholding i.e., Overseas Shipholding and Balancer go up and down completely randomly.

Pair Corralation between Overseas Shipholding and Balancer

Considering the 90-day investment horizon Overseas Shipholding Group is expected to generate 0.25 times more return on investment than Balancer. However, Overseas Shipholding Group is 4.06 times less risky than Balancer. It trades about -0.03 of its potential returns per unit of risk. Balancer is currently generating about -0.04 per unit of risk. If you would invest  296.00  in Overseas Shipholding Group on September 4, 2022 and sell it today you would lose (4.00)  from holding Overseas Shipholding Group or give up 1.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
ValuesDaily Returns

Overseas Shipholding Group  vs.  Balancer

 Performance (%) 
Overseas Shipholding 
Overseas Performance
0 of 100
Over the last 90 days Overseas Shipholding Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Overseas Price Channel

Balancer Performance
0 of 100
Over the last 90 days Balancer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Balancer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Balancer Price Channel

Overseas Shipholding and Balancer Volatility Contrast

   Predicted Return Density   

Pair Trading with Overseas Shipholding and Balancer

The main advantage of trading using opposite Overseas Shipholding and Balancer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Overseas Shipholding position performs unexpectedly, Balancer 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 Balancer will offset losses from the drop in Balancer's long position.
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The idea behind Overseas Shipholding Group and Balancer 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.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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