Correlation Between Kawasaki Kisen and Hapag Lloyd

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

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

Diversification Opportunities for Kawasaki Kisen and Hapag Lloyd

0.12

Correlation Coefficient

Kawasaki Kisen  Hapag Lloyd

Average diversification

The 3 months correlation between Kawasaki and Hapag is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kawasaki Kisen Kaisha and Hapag Lloyd Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hapag Lloyd Aktienge and Kawasaki Kisen 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 Kawasaki Kisen Kaisha are associated (or correlated) with Hapag Lloyd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hapag Lloyd Aktienge has no effect on the direction of Kawasaki Kisen i.e., Kawasaki Kisen and Hapag Lloyd go up and down completely randomly.

Pair Corralation between Kawasaki Kisen and Hapag Lloyd

Assuming the 90 days horizon Kawasaki Kisen Kaisha is expected to generate 1.07 times more return on investment than Hapag Lloyd. However, Kawasaki Kisen is 1.07 times more volatile than Hapag Lloyd Aktiengesellschaft. It trades about 0.0 of its potential returns per unit of risk. Hapag Lloyd Aktiengesellschaft is currently generating about -0.02 per unit of risk. If you would invest  1,489  in Kawasaki Kisen Kaisha on September 15, 2024 and sell it today you would lose (79.00) from holding Kawasaki Kisen Kaisha or give up 5.31% of portfolio value over 90 days.

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

Kawasaki Kisen Kaisha  vs.  Hapag Lloyd Aktiengesellschaft

Kawasaki Kisen Kaisha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kawasaki Kisen Kaisha has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Kawasaki Kisen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hapag Lloyd Aktienge

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hapag Lloyd Aktiengesellschaft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Hapag Lloyd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kawasaki Kisen and Hapag Lloyd

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

The idea behind Kawasaki Kisen Kaisha and Hapag Lloyd Aktiengesellschaft 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.