Correlation Between Mitsui OSK and COSCO SHIPPING

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

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

Diversification Opportunities for Mitsui OSK and COSCO SHIPPING

0.07

Correlation Coefficient

Mitsui OSK  COSCO SHIPPING

Significant diversification

The 3 months correlation between Mitsui and COSCO is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui OSK Lines and COSCO SHIPPING Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Holdings and Mitsui OSK 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 Mitsui OSK Lines are associated (or correlated) with COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Holdings has no effect on the direction of Mitsui OSK i.e., Mitsui OSK and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Mitsui OSK and COSCO SHIPPING

Assuming the 90 days horizon Mitsui OSK is expected to generate 12.4 times less return on investment than COSCO SHIPPING. But when comparing it to its historical volatility, Mitsui OSK Lines is 2.8 times less risky than COSCO SHIPPING. It trades about 0.02 of its potential returns per unit of risk. COSCO SHIPPING Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  127.00  in COSCO SHIPPING Holdings on September 13, 2024 and sell it today you would earn a total of  21.00  from holding COSCO SHIPPING Holdings or generate 16.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Mitsui OSK Lines  vs.  COSCO SHIPPING Holdings

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.

COSCO SHIPPING Holdings

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COSCO SHIPPING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitsui OSK and COSCO SHIPPING

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

The idea behind Mitsui OSK Lines and COSCO SHIPPING Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.