Correlation Between Pacific Basin and Mitsui OSK

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

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

Diversification Opportunities for Pacific Basin and Mitsui OSK

-0.04

Correlation Coefficient

Pacific Basin  Mitsui OSK

Good diversification

The 3 months correlation between Pacific and Mitsui is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and Mitsui OSK Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui OSK Lines and Pacific Basin 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 Pacific Basin Shipping are associated (or correlated) with Mitsui OSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui OSK Lines has no effect on the direction of Pacific Basin i.e., Pacific Basin and Mitsui OSK go up and down completely randomly.

Pair Corralation between Pacific Basin and Mitsui OSK

If you would invest  500.00  in Pacific Basin Shipping on September 13, 2024 and sell it today you would lose (10.00) from holding Pacific Basin Shipping or give up 2.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	17.46%
Values	Daily Returns

Pacific Basin Shipping  vs.  Mitsui OSK Lines

Pacific Basin Shipping

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Basin Shipping are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental drivers, Pacific Basin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mitsui OSK Lines

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pacific Basin and Mitsui OSK

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

The idea behind Pacific Basin Shipping and Mitsui OSK Lines 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.