Correlation Between Knorr Bremse and Nippon Yusen

Can any of the company-specific risk be diversified away by investing in both Knorr Bremse and Nippon Yusen 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 Knorr Bremse and Nippon Yusen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Knorr Bremse Aktiengesellschaft and Nippon Yusen Kabushiki, you can compare the effects of market volatilities on Knorr Bremse and Nippon Yusen 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 Knorr Bremse with a short position of Nippon Yusen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knorr Bremse and Nippon Yusen.

Diversification Opportunities for Knorr Bremse and Nippon Yusen

0.15

Correlation Coefficient

Knorr Bremse  Nippon Yusen

Average diversification

The 3 months correlation between Knorr and Nippon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Knorr Bremse Aktiengesellschaf and Nippon Yusen Kabushiki in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Yusen Kabushiki and Knorr Bremse 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 Knorr Bremse Aktiengesellschaft are associated (or correlated) with Nippon Yusen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Yusen Kabushiki has no effect on the direction of Knorr Bremse i.e., Knorr Bremse and Nippon Yusen go up and down completely randomly.

Pair Corralation between Knorr Bremse and Nippon Yusen

Assuming the 90 days horizon Knorr Bremse Aktiengesellschaft is expected to under-perform the Nippon Yusen. But the pink sheet apears to be less risky and, when comparing its historical volatility, Knorr Bremse Aktiengesellschaft is 1.49 times less risky than Nippon Yusen. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Nippon Yusen Kabushiki is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  649.00  in Nippon Yusen Kabushiki on October 20, 2024 and sell it today you would lose (32.00) from holding Nippon Yusen Kabushiki or give up 4.93% of portfolio value over 90 days.

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

Knorr Bremse Aktiengesellschaf  vs.  Nippon Yusen Kabushiki

Knorr Bremse Aktieng

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knorr Bremse Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nippon Yusen Kabushiki

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Yusen Kabushiki has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic 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 Knorr Bremse and Nippon Yusen

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

The idea behind Knorr Bremse Aktiengesellschaft and Nippon Yusen Kabushiki 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.