Correlation Between Golden Ocean and Mitsui OSK

Can any of the company-specific risk be diversified away by investing in both Golden Ocean and Mitsui OSK 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 Golden Ocean and Mitsui OSK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Golden Ocean Group and Mitsui OSK Lines, you can compare the effects of market volatilities on Golden Ocean and Mitsui OSK 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 Golden Ocean with a short position of Mitsui OSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Ocean and Mitsui OSK.

Diversification Opportunities for Golden Ocean and Mitsui OSK

0.1

Correlation Coefficient

Golden Ocean  Mitsui OSK

Average diversification

The 3 months correlation between Golden and Mitsui is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ocean Group and Mitsui OSK Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui OSK Lines and Golden Ocean 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 Golden Ocean Group are associated (or correlated) with Mitsui OSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui OSK Lines has no effect on the direction of Golden Ocean i.e., Golden Ocean and Mitsui OSK go up and down completely randomly.

Pair Corralation between Golden Ocean and Mitsui OSK

Given the investment horizon of 90 days Golden Ocean Group is expected to under-perform the Mitsui OSK. In addition to that, Golden Ocean is 1.3 times more volatile than Mitsui OSK Lines. It trades about -0.6 of its total potential returns per unit of risk. Mitsui OSK Lines is currently generating about 0.04 per unit of volatility. If you would invest  1,686  in Mitsui OSK Lines on September 15, 2024 and sell it today you would earn a total of  19.00  from holding Mitsui OSK Lines or generate 1.13% return on investment over 90 days.

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

Golden Ocean Group  vs.  Mitsui OSK Lines

Golden Ocean Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Ocean Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Mitsui OSK Lines

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui OSK Lines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Mitsui OSK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Golden Ocean and Mitsui OSK

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

The idea behind Golden Ocean Group and Mitsui OSK Lines 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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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.