Correlation Between Hapag Lloyd and Mitsui OSK

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

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

Diversification Opportunities for Hapag Lloyd and Mitsui OSK

0.25

Correlation Coefficient

Hapag Lloyd  Mitsui OSK

Modest diversification

The 3 months correlation between Hapag and Mitsui is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hapag Lloyd Aktiengesellschaft 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 Hapag Lloyd 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 Hapag Lloyd Aktiengesellschaft 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 Hapag Lloyd i.e., Hapag Lloyd and Mitsui OSK go up and down completely randomly.

Pair Corralation between Hapag Lloyd and Mitsui OSK

Assuming the 90 days horizon Hapag Lloyd Aktiengesellschaft is expected to generate 1.64 times more return on investment than Mitsui OSK. However, Hapag Lloyd is 1.64 times more volatile than Mitsui OSK Lines. It trades about 0.06 of its potential returns per unit of risk. Mitsui OSK Lines is currently generating about -0.03 per unit of risk. If you would invest  16,362  in Hapag Lloyd Aktiengesellschaft on September 12, 2024 and sell it today you would earn a total of  411.00  from holding Hapag Lloyd Aktiengesellschaft or generate 2.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Hapag Lloyd Aktiengesellschaft  vs.  Mitsui OSK Lines

Hapag Lloyd Aktienge

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hapag Lloyd Aktiengesellschaft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Hapag Lloyd reported solid returns over the last few months and may actually be approaching a breakup point.

Mitsui OSK Lines

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui OSK Lines are ranked lower than 2 (%) 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 Hapag Lloyd and Mitsui OSK

The main advantage of trading using opposite Hapag Lloyd and Mitsui OSK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hapag Lloyd 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 Hapag Lloyd Aktiengesellschaft 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..