Correlation Between Carnival Plc and Oriental Land

Can any of the company-specific risk be diversified away by investing in both Carnival Plc and Oriental Land 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 Carnival Plc and Oriental Land into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carnival Plc ADS and Oriental Land Co, you can compare the effects of market volatilities on Carnival Plc and Oriental Land 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 Carnival Plc with a short position of Oriental Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Plc and Oriental Land.

Diversification Opportunities for Carnival Plc and Oriental Land

-0.5

Correlation Coefficient

Carnival Plc  Oriental Land

Very good diversification

The 3 months correlation between Carnival and Oriental is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Plc ADS and Oriental Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Land and Carnival Plc 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 Carnival Plc ADS are associated (or correlated) with Oriental Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Land has no effect on the direction of Carnival Plc i.e., Carnival Plc and Oriental Land go up and down completely randomly.

Pair Corralation between Carnival Plc and Oriental Land

Considering the 90-day investment horizon Carnival Plc ADS is expected to under-perform the Oriental Land. In addition to that, Carnival Plc is 1.39 times more volatile than Oriental Land Co. It trades about -0.11 of its total potential returns per unit of risk. Oriental Land Co is currently generating about -0.06 per unit of volatility. If you would invest  2,168  in Oriental Land Co on October 21, 2024 and sell it today you would lose (33.00) from holding Oriental Land Co or give up 1.52% of portfolio value over 90 days.

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

Carnival Plc ADS  vs.  Oriental Land Co

Carnival Plc ADS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival Plc ADS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Carnival Plc disclosed solid returns over the last few months and may actually be approaching a breakup point.

Oriental Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oriental Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Carnival Plc and Oriental Land

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

The idea behind Carnival Plc ADS and Oriental Land Co 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.