Correlation Between Kawasaki Kisen and MPC Container

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

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

Diversification Opportunities for Kawasaki Kisen and MPC Container

0.55

Correlation Coefficient

Kawasaki Kisen  MPC Container

Very weak diversification

The 3 months correlation between Kawasaki and MPC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kawasaki Kisen Kaisha and MPC Container Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Container Ships and Kawasaki Kisen 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 Kawasaki Kisen Kaisha are associated (or correlated) with MPC Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Container Ships has no effect on the direction of Kawasaki Kisen i.e., Kawasaki Kisen and MPC Container go up and down completely randomly.

Pair Corralation between Kawasaki Kisen and MPC Container

Assuming the 90 days horizon Kawasaki Kisen Kaisha is expected to generate 0.33 times more return on investment than MPC Container. However, Kawasaki Kisen Kaisha is 3.0 times less risky than MPC Container. It trades about -0.24 of its potential returns per unit of risk. MPC Container Ships is currently generating about -0.16 per unit of risk. If you would invest  1,410  in Kawasaki Kisen Kaisha on October 24, 2024 and sell it today you would lose (57.00) from holding Kawasaki Kisen Kaisha or give up 4.04% of portfolio value over 90 days.

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

Kawasaki Kisen Kaisha  vs.  MPC Container Ships

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 latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MPC Container Ships

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MPC Container Ships has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Kawasaki Kisen and MPC Container

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

The idea behind Kawasaki Kisen Kaisha and MPC Container Ships 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.