Correlation Between Nippon Yusen and Caravelle International

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

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

Diversification Opportunities for Nippon Yusen and Caravelle International

0.29

Correlation Coefficient

Nippon Yusen  Caravelle International

Modest diversification

The 3 months correlation between Nippon and Caravelle is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Yusen Kabushiki and Caravelle International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravelle International and Nippon Yusen 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 Nippon Yusen Kabushiki are associated (or correlated) with Caravelle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravelle International has no effect on the direction of Nippon Yusen i.e., Nippon Yusen and Caravelle International go up and down completely randomly.

Pair Corralation between Nippon Yusen and Caravelle International

Assuming the 90 days horizon Nippon Yusen Kabushiki is expected to under-perform the Caravelle International. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nippon Yusen Kabushiki is 4.9 times less risky than Caravelle International. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Caravelle International Group is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Caravelle International Group on September 13, 2024 and sell it today you would earn a total of  13.00  from holding Caravelle International Group or generate 41.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	19.05%
Values	Daily Returns

Nippon Yusen Kabushiki  vs.  Caravelle International Group

Nippon Yusen Kabushiki

Risk-Adjusted Performance

0 of 100

Very Weak

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

Caravelle International

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Caravelle International Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unsteady fundamental indicators, Caravelle International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nippon Yusen and Caravelle International

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

The idea behind Nippon Yusen Kabushiki and Caravelle International 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.