Correlation Between International Container and MISUMI

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

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

Diversification Opportunities for International Container and MISUMI

0.38

Correlation Coefficient

International Container  MISUMI

Weak diversification

The 3 months correlation between International and MISUMI is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding International Container Termin and MISUMI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MISUMI Group and International Container 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 International Container Terminal are associated (or correlated) with MISUMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MISUMI Group has no effect on the direction of International Container i.e., International Container and MISUMI go up and down completely randomly.

Pair Corralation between International Container and MISUMI

Assuming the 90 days horizon International Container Terminal is expected to generate 1.48 times more return on investment than MISUMI. However, International Container is 1.48 times more volatile than MISUMI Group. It trades about -0.01 of its potential returns per unit of risk. MISUMI Group is currently generating about -0.04 per unit of risk. If you would invest  690.00  in International Container Terminal on September 15, 2024 and sell it today you would lose (48.00) from holding International Container Terminal or give up 6.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

International Container Termin  vs.  MISUMI Group

International Container

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Container Terminal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, International Container is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MISUMI Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MISUMI Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, MISUMI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with International Container and MISUMI

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

The idea behind International Container Terminal and MISUMI Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..