Correlation Between Mitsui OSK and Euroseas

Can any of the company-specific risk be diversified away by investing in both Mitsui OSK and Euroseas 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 Euroseas 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 Euroseas, you can compare the effects of market volatilities on Mitsui OSK and Euroseas 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 Euroseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui OSK and Euroseas.

Diversification Opportunities for Mitsui OSK and Euroseas

0.12

Correlation Coefficient

Mitsui OSK  Euroseas

Average diversification

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

Pair Corralation between Mitsui OSK and Euroseas

Assuming the 90 days horizon Mitsui OSK Lines is expected to generate 0.67 times more return on investment than Euroseas. However, Mitsui OSK Lines is 1.48 times less risky than Euroseas. It trades about 0.03 of its potential returns per unit of risk. Euroseas is currently generating about -0.09 per unit of risk. If you would invest  1,643  in Mitsui OSK Lines on September 12, 2024 and sell it today you would earn a total of  50.00  from holding Mitsui OSK Lines or generate 3.04% return on investment over 90 days.

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

Mitsui OSK Lines  vs.  Euroseas

Mitsui OSK Lines

Risk-Adjusted Performance

2 of 100

Weak

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.

Euroseas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euroseas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mitsui OSK and Euroseas

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

The idea behind Mitsui OSK Lines and Euroseas 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.