Correlation Between Mitsui OSK and Euroseas

Can any of the company-specific risk be diversified away by investing in both Mitsui OSK and Euroseas 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 Euroseas 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 Euroseas, you can compare the effects of market volatilities on Mitsui OSK and Euroseas 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 Euroseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui OSK and Euroseas.

Diversification Opportunities for Mitsui OSK and Euroseas

-0.1

Correlation Coefficient

Mitsui OSK  Euroseas

Good diversification

The 3 months correlation between Mitsui and Euroseas is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui OSK Lines and Euroseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euroseas 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 Euroseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euroseas has no effect on the direction of Mitsui OSK i.e., Mitsui OSK and Euroseas go up and down completely randomly.

Pair Corralation between Mitsui OSK and Euroseas

Assuming the 90 days horizon Mitsui OSK Lines is expected to generate 0.43 times more return on investment than Euroseas. However, Mitsui OSK Lines is 2.34 times less risky than Euroseas. It trades about 0.12 of its potential returns per unit of risk. Euroseas is currently generating about -0.01 per unit of risk. If you would invest  1,667  in Mitsui OSK Lines on December 20, 2024 and sell it today you would earn a total of  184.00  from holding Mitsui OSK Lines or generate 11.04% 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.  Euroseas

Mitsui OSK Lines

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui OSK Lines are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Mitsui OSK may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Euroseas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Euroseas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Euroseas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mitsui OSK and Euroseas

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

The idea behind Mitsui OSK Lines and Euroseas 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.