Correlation Between Hapag Lloyd and Kawasaki Kisen

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

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

Diversification Opportunities for Hapag Lloyd and Kawasaki Kisen

0.22

Correlation Coefficient

Hapag Lloyd  Kawasaki Kisen

Modest diversification

The 3 months correlation between Hapag and Kawasaki is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hapag Lloyd Aktiengesellschaft 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 Hapag Lloyd 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 Hapag Lloyd Aktiengesellschaft 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 Hapag Lloyd i.e., Hapag Lloyd and Kawasaki Kisen go up and down completely randomly.

Pair Corralation between Hapag Lloyd and Kawasaki Kisen

Assuming the 90 days horizon Hapag Lloyd Aktiengesellschaft is expected to under-perform the Kawasaki Kisen. In addition to that, Hapag Lloyd is 2.44 times more volatile than Kawasaki Kisen Kaisha. It trades about -0.05 of its total potential returns per unit of risk. Kawasaki Kisen Kaisha is currently generating about -0.08 per unit of volatility. If you would invest  1,470  in Kawasaki Kisen Kaisha on October 9, 2024 and sell it today you would lose (60.00) from holding Kawasaki Kisen Kaisha or give up 4.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Hapag Lloyd Aktiengesellschaft  vs.  Kawasaki Kisen Kaisha

Hapag Lloyd Aktienge

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hapag Lloyd Aktiengesellschaft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Hapag Lloyd may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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. In spite of fairly strong forward-looking signals, Kawasaki Kisen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hapag Lloyd and Kawasaki Kisen

The main advantage of trading using opposite Hapag Lloyd and Kawasaki Kisen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hapag Lloyd 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 Hapag Lloyd Aktiengesellschaft 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.

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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.