Beyond Profit: The Case for Risk-Adjusted Metrics
The Problem With Unadjusted Metrics
[Oslo— March 5, 2025]
Freight markets are volatile by their very nature; prices toss and turn around geopolitics and other factors. In this environment, raw profit isn’t enough to measure true performance.
Two traders might generate the same P&L, but how can we look more deeply into the path they took to get there?
That’s where adjusted performance metrics come into play. Prosmar has identified several opportunities to cut out the noise on individual fixtures, in addition to deploying a number of portfolio-based ratios. By connecting that with Prosmar’s data lake, which snapshots your trading positions daily, you can apply these advanced analytics to assess and optimize your strategy over time.
Below are details of some of the metrics our clients have taken advantage of to drive improved insight and understanding of their operations.
Gain Insight Into Every Fixture.
Fixture Timing: A better insight on your fixture pattern.
Within a logical window for fixing your positions, how far were you off the ideal price and timing on your adjusted benchmark.
A well-timed fixture can outperform the market, but mistimed deals erode margins—how does your historical pattern compare to an adjusted benchmark?
For example: The ideal benchmark price for a fixture window was $25,000/day, but you fixed at $23,500/day → A $1,500/day loss vs. optimal timing
Over multiple trades, these timing mismatches can begin show patterns; are you consistently fixing too early or too late in bull and bear conditions.
With Prosmar, you can track and analyze your fixture patterns daily, ensuring you refine your timing strategy over the long run.
Operations vs FFA: Are you beating the paper market?
For every physical fixture on the books, how would a paper contract on the same terms have performed, are you consistently operating in a way that beats the paper benchmark?
A well-run operation should outperform FFAs. If not, why take on operational risks at all?
If this trend repeats, it suggests inefficiencies in physical trading whether due to timing, voyage execution, or asset selection.
Conversely, if physical consistently outperforms, your strategy is adding value beyond market movements.
Aligning the trades you have on the books can represent a technical challenge, but this is overcome by Prosmar’s advanced algorithms and data lake service. Contrasting your positions against paper is a valuable exercise in allocating a premium to physical efficiency.
Margin Decomposition: Attribute the drivers of profit.
For each fixture, where exactly did the profit come from, did you benefit from a well-fixed cargo or vessel, or can you attribute things to the operation of the vessel itself.
Understanding the source of gains lets you replicate success and correct weaknesses. The voyage fixtures link directly to the P&L line items and their variances to the
For example, a voyage yielded a profit—but was it due to:
Market exposure (locking in a good rate at the right time)?
Cargo-vessel optimization (pairing the right ship with the right cargo)?
Operational efficiency above your estimates (fuel savings, route optimization)?
Prosmar provides a detailed breakdown of your profit sources, so you can double down on the parts that work and fix what doesn’t. Starting with your initial fixture, working through the application of a vessel or a cargo, and tracking the changes in P&L from operational factors.
The Power of Risk-Adjusted Portfolio Metrics - A Holistic View
Portfolio Sharpe Ratio: Measuring Return vs. Risk
The Sharpe Ratio tells you how much return you’re making per unit of risk, and is the key ratio in assessing the true performance of many portfolios.
A high Sharpe Ratio means you’re efficiently managing your position. A low ratio means you’re taking on higher risk without enough reward.
For Example:
· Trader A made 10% returns with 20% volatility → Sharpe Ratio = 0.5
· Trader B made 8% returns with only 8% volatility → Sharpe Ratio = 1.0
· Even though Trader A made more money, Trader B was more efficient in risk-taking, and will likely perform better in the long run.
With Prosmar’s daily position tracking, you can calculate an updated Sharpe on actual trade data daily and track its movement over time. Allowing you how effectively you balance risk and return.
Portfolio Beta: & Treynor Understanding Market Risk Exposure
Unlike Sharpe, the Treynor Ratio is constructed from Beta, and focuses on systematic and correlation risk (how your portfolio moves relative to freight market indices).
If your beta is high, your returns are heavily tied to the market, meaning you’re exposed to systematic shocks.
Generally, a high beta can be a marker of poor performance in an actively managed shipping portfolio, which should aim for good returns in a variety of market perspectives.
With Prosmar, you can benchmark your portfolio against the asset specific freight indices to see if your performance is truly market-independent, and how well your book reacts to turning points.
Portfolio Value at Risk vs Returns: Measuring Downside Exposure
Prosmar’s VaR module calculates a statistical expectation of how bad things could get in negative and extreme scenarios.
Freight markets are prone to tail risks, geopolitical crises, regulatory shocks, sudden demand collapses, all of which is built into the modelling.
Booked returns can then be contrasted against the modelled risk of the exposure on the books, allowing the manager to effectively oversee the downside risk taken for the returns achieved.
By contrasting proprietary VaR data vs your internal trade book, the Prosmar system can deliver an improved variation of the Sortino Ratio, which is commonly used in the Hedge Fund industry to contrast performance vs drawdown risk, with an acceptable allowance for volatility.
Why Prosmar’s Data Lake Gives You an Edge
Most traders struggle with risk-adjusted analytics because they don’t have a structured, consistent dataset of past positions.
With Prosmar’s daily snapshots, you can:
Instantly see your day to day movements in an adapted dashboard.
Slice and dice your portfolio to see things on a more granular basis.
Review your strategies using real-world data, not just theory.
Compare different hedging approaches. Spot vs. FFAs, bunker hedging, COAs.
Automatically calculate Sharpe, Treynor & VaR Ratios without manually reconstructing past trades.
Final Thoughts: Smarter Trading Starts with Smarter Metrics
Your trading performance isn’t just about profit, it’s about how much risk you take to get there, and how effective you can be on that basis.
With Prosmar’s daily snapshots and analytics, you can add a statistical element to your gut feeling and start making more data-driven trading decisions.
Want to see your true performance? Get in touch with Prosmar today to see things in practice.