Correlation Between SHIMANO INC and Royal Caribbean

Can any of the company-specific risk be diversified away by investing in both SHIMANO INC and Royal Caribbean 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 SHIMANO INC and Royal Caribbean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SHIMANO INC UNSPADR10 and Royal Caribbean Group, you can compare the effects of market volatilities on SHIMANO INC and Royal Caribbean 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 SHIMANO INC with a short position of Royal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIMANO INC and Royal Caribbean.

Diversification Opportunities for SHIMANO INC and Royal Caribbean

-0.88

Correlation Coefficient

SHIMANO INC  Royal Caribbean

Pay attention - limited upside

The 3 months correlation between SHIMANO and Royal is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding SHIMANO INC UNSPADR10 and Royal Caribbean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Group and SHIMANO INC 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 SHIMANO INC UNSPADR10 are associated (or correlated) with Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Group has no effect on the direction of SHIMANO INC i.e., SHIMANO INC and Royal Caribbean go up and down completely randomly.

Pair Corralation between SHIMANO INC and Royal Caribbean

Assuming the 90 days trading horizon SHIMANO INC UNSPADR10 is expected to under-perform the Royal Caribbean. In addition to that, SHIMANO INC is 1.83 times more volatile than Royal Caribbean Group. It trades about -0.04 of its total potential returns per unit of risk. Royal Caribbean Group is currently generating about -0.01 per unit of volatility. If you would invest  23,160  in Royal Caribbean Group on September 25, 2024 and sell it today you would lose (140.00) from holding Royal Caribbean Group or give up 0.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

SHIMANO INC UNSPADR10  vs.  Royal Caribbean Group

SHIMANO INC UNSPADR10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIMANO INC UNSPADR10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Royal Caribbean Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Caribbean Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Royal Caribbean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SHIMANO INC and Royal Caribbean

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

The idea behind SHIMANO INC UNSPADR10 and Royal Caribbean 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.