Correlation Between Mitsui OSK and Qingdao Port

Can any of the company-specific risk be diversified away by investing in both Mitsui OSK and Qingdao Port 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 Mitsui OSK and Qingdao Port into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mitsui OSK Lines and Qingdao Port International, you can compare the effects of market volatilities on Mitsui OSK and Qingdao Port 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 Mitsui OSK with a short position of Qingdao Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui OSK and Qingdao Port.

Diversification Opportunities for Mitsui OSK and Qingdao Port

-0.12

Correlation Coefficient

Mitsui OSK  Qingdao Port

Good diversification

The 3 months correlation between Mitsui and Qingdao is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui OSK Lines and Qingdao Port International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Port Interna and Mitsui OSK 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 Mitsui OSK Lines are associated (or correlated) with Qingdao Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Port Interna has no effect on the direction of Mitsui OSK i.e., Mitsui OSK and Qingdao Port go up and down completely randomly.

Pair Corralation between Mitsui OSK and Qingdao Port

Assuming the 90 days trading horizon Mitsui OSK Lines is expected to generate 1.39 times more return on investment than Qingdao Port. However, Mitsui OSK is 1.39 times more volatile than Qingdao Port International. It trades about 0.03 of its potential returns per unit of risk. Qingdao Port International is currently generating about -0.01 per unit of risk. If you would invest  3,226  in Mitsui OSK Lines on December 27, 2024 and sell it today you would earn a total of  88.00  from holding Mitsui OSK Lines or generate 2.73% return on investment over 90 days.

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

Mitsui OSK Lines  vs.  Qingdao Port International

Mitsui OSK Lines

Risk-Adjusted Performance

Weak

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

Qingdao Port Interna

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qingdao Port International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Qingdao Port is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mitsui OSK and Qingdao Port

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

The idea behind Mitsui OSK Lines and Qingdao Port International 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.