Correlation Between Mitsui OSK and Nippon Yusen

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

Diversification Opportunities for Mitsui OSK and Nippon Yusen

0.97

Correlation Coefficient

Mitsui OSK  Nippon Yusen

Almost no diversification

The 3 months correlation between Mitsui and Nippon is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui OSK Lines 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 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 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 Mitsui OSK i.e., Mitsui OSK and Nippon Yusen go up and down completely randomly.

Pair Corralation between Mitsui OSK and Nippon Yusen

Assuming the 90 days horizon Mitsui OSK Lines is expected to generate 0.96 times more return on investment than Nippon Yusen. However, Mitsui OSK Lines is 1.04 times less risky than Nippon Yusen. It trades about 0.06 of its potential returns per unit of risk. Nippon Yusen Kabushiki is currently generating about 0.04 per unit of risk. If you would invest  1,742  in Mitsui OSK Lines on December 29, 2024 and sell it today you would earn a total of  81.00  from holding Mitsui OSK Lines or generate 4.65% return on investment over 90 days.

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

Mitsui OSK Lines  vs.  Nippon Yusen Kabushiki

Mitsui OSK Lines

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui OSK Lines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Mitsui OSK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nippon Yusen Kabushiki

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Yusen Kabushiki are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Nippon Yusen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mitsui OSK and Nippon Yusen

The main advantage of trading using opposite Mitsui OSK and Nippon Yusen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui OSK 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 Mitsui OSK Lines 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.