Correlation Between Mitsui OSK and SITC International

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

Diversification Opportunities for Mitsui OSK and SITC International

0.22

Correlation Coefficient

Mitsui OSK  SITC International

Modest diversification

The 3 months correlation between Mitsui and SITC is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui OSK Lines and SITC International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITC International 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 SITC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITC International has no effect on the direction of Mitsui OSK i.e., Mitsui OSK and SITC International go up and down completely randomly.

Pair Corralation between Mitsui OSK and SITC International

Assuming the 90 days horizon Mitsui OSK is expected to generate 2.98 times less return on investment than SITC International. But when comparing it to its historical volatility, Mitsui OSK Lines is 3.98 times less risky than SITC International. It trades about 0.06 of its potential returns per unit of risk. SITC International Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,390  in SITC International Holdings on December 28, 2024 and sell it today you would earn a total of  112.00  from holding SITC International Holdings or generate 4.69% return on investment over 90 days.

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

Mitsui OSK Lines  vs.  SITC International Holdings

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.

SITC International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SITC International Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, SITC International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitsui OSK and SITC International

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

The idea behind Mitsui OSK Lines and SITC International Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.