Correlation Between COSCO SHIPPING and Kawasaki Kisen

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

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

Diversification Opportunities for COSCO SHIPPING and Kawasaki Kisen

-0.53

Correlation Coefficient

COSCO SHIPPING  Kawasaki Kisen

Excellent diversification

The 3 months correlation between COSCO and Kawasaki is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Holdings and Kawasaki Kisen Kaisha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kawasaki Kisen Kaisha and COSCO SHIPPING 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 COSCO SHIPPING Holdings are associated (or correlated) with Kawasaki Kisen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kawasaki Kisen Kaisha has no effect on the direction of COSCO SHIPPING i.e., COSCO SHIPPING and Kawasaki Kisen go up and down completely randomly.

Pair Corralation between COSCO SHIPPING and Kawasaki Kisen

Assuming the 90 days horizon COSCO SHIPPING Holdings is expected to generate 1.4 times more return on investment than Kawasaki Kisen. However, COSCO SHIPPING is 1.4 times more volatile than Kawasaki Kisen Kaisha. It trades about 0.23 of its potential returns per unit of risk. Kawasaki Kisen Kaisha is currently generating about 0.03 per unit of risk. If you would invest  134.00  in COSCO SHIPPING Holdings on September 27, 2024 and sell it today you would earn a total of  15.00  from holding COSCO SHIPPING Holdings or generate 11.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

COSCO SHIPPING Holdings  vs.  Kawasaki Kisen Kaisha

COSCO SHIPPING Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Holdings are ranked lower than 9 (%) 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.

Kawasaki Kisen Kaisha

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with COSCO SHIPPING and Kawasaki Kisen

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

The idea behind COSCO SHIPPING Holdings and Kawasaki Kisen Kaisha 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.