Correlation Between COSCO SHIPPING and Nippon Yusen

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

Diversification Opportunities for COSCO SHIPPING and Nippon Yusen

-0.13

Correlation Coefficient

COSCO SHIPPING  Nippon Yusen

Good diversification

The 3 months correlation between COSCO and Nippon is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Holdings and Nippon Yusen Kabushiki in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Yusen Kabushiki 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 Nippon Yusen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Yusen Kabushiki has no effect on the direction of COSCO SHIPPING i.e., COSCO SHIPPING and Nippon Yusen go up and down completely randomly.

Pair Corralation between COSCO SHIPPING and Nippon Yusen

Assuming the 90 days horizon COSCO SHIPPING Holdings is expected to under-perform the Nippon Yusen. In addition to that, COSCO SHIPPING is 2.59 times more volatile than Nippon Yusen Kabushiki. It trades about -0.01 of its total potential returns per unit of risk. Nippon Yusen Kabushiki is currently generating about 0.04 per unit of volatility. If you would invest  662.00  in Nippon Yusen Kabushiki on December 29, 2024 and sell it today you would earn a total of  18.00  from holding Nippon Yusen Kabushiki or generate 2.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

COSCO SHIPPING Holdings  vs.  Nippon Yusen Kabushiki

COSCO SHIPPING Holdings

Risk-Adjusted Performance

Very Weak

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

Nippon Yusen Kabushiki

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Yusen Kabushiki are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with COSCO SHIPPING and Nippon Yusen

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

The idea behind COSCO SHIPPING Holdings and Nippon Yusen Kabushiki 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.