Correlation Between COSCO SHIPPING and Orient Overseas

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

By analyzing existing cross correlation between COSCO SHIPPING Ports and Orient Overseas Limited, you can compare the effects of market volatilities on COSCO SHIPPING and Orient Overseas 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 Orient Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSCO SHIPPING and Orient Overseas.

Diversification Opportunities for COSCO SHIPPING and Orient Overseas

0.01

Correlation Coefficient

COSCO SHIPPING  Orient Overseas

Significant diversification

The 3 months correlation between COSCO and Orient is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Ports and Orient Overseas Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas 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 Ports are associated (or correlated) with Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas has no effect on the direction of COSCO SHIPPING i.e., COSCO SHIPPING and Orient Overseas go up and down completely randomly.

Pair Corralation between COSCO SHIPPING and Orient Overseas

Assuming the 90 days horizon COSCO SHIPPING Ports is expected to generate 0.23 times more return on investment than Orient Overseas. However, COSCO SHIPPING Ports is 4.39 times less risky than Orient Overseas. It trades about 0.21 of its potential returns per unit of risk. Orient Overseas Limited is currently generating about -0.3 per unit of risk. If you would invest  55.00  in COSCO SHIPPING Ports on September 26, 2024 and sell it today you would earn a total of  1.00  from holding COSCO SHIPPING Ports or generate 1.82% return on investment over 90 days.

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

COSCO SHIPPING Ports  vs.  Orient Overseas Limited

COSCO SHIPPING Ports

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Ports are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, COSCO SHIPPING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Orient Overseas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orient Overseas Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with COSCO SHIPPING and Orient Overseas

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

The idea behind COSCO SHIPPING Ports and Orient Overseas Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.