Correlation Between COSCO SHIPPING and Mitsui OSK

Can any of the company-specific risk be diversified away by investing in both COSCO SHIPPING 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 COSCO SHIPPING and Mitsui OSK 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 Mitsui OSK Lines, you can compare the effects of market volatilities on COSCO SHIPPING 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 COSCO SHIPPING with a short position of Mitsui OSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSCO SHIPPING and Mitsui OSK.

Diversification Opportunities for COSCO SHIPPING and Mitsui OSK

0.23

Correlation Coefficient

COSCO SHIPPING  Mitsui OSK

Modest diversification

The 3 months correlation between COSCO and Mitsui is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Holdings 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 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 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 COSCO SHIPPING i.e., COSCO SHIPPING and Mitsui OSK go up and down completely randomly.

Pair Corralation between COSCO SHIPPING and Mitsui OSK

Assuming the 90 days horizon COSCO SHIPPING is expected to generate 1.15 times less return on investment than Mitsui OSK. In addition to that, COSCO SHIPPING is 1.62 times more volatile than Mitsui OSK Lines. It trades about 0.05 of its total potential returns per unit of risk. Mitsui OSK Lines is currently generating about 0.09 per unit of volatility. If you would invest  1,710  in Mitsui OSK Lines on November 29, 2024 and sell it today you would earn a total of  136.00  from holding Mitsui OSK Lines or generate 7.95% return on investment over 90 days.

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

COSCO SHIPPING Holdings  vs.  Mitsui OSK Lines

COSCO SHIPPING Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, COSCO SHIPPING may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Mitsui OSK Lines

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui OSK Lines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Mitsui OSK may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with COSCO SHIPPING and Mitsui OSK

The main advantage of trading using opposite COSCO SHIPPING and Mitsui OSK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSCO SHIPPING 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 COSCO SHIPPING Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.