Correlation Between Mitsui OSK and Stolt Nielsen

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

Diversification Opportunities for Mitsui OSK and Stolt Nielsen

-0.17

Correlation Coefficient

Mitsui OSK  Stolt Nielsen

Good diversification

The 3 months correlation between Mitsui and Stolt is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui OSK Lines and Stolt Nielsen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stolt Nielsen Limited 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 Stolt Nielsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stolt Nielsen Limited has no effect on the direction of Mitsui OSK i.e., Mitsui OSK and Stolt Nielsen go up and down completely randomly.

Pair Corralation between Mitsui OSK and Stolt Nielsen

Assuming the 90 days horizon Mitsui OSK Lines is expected to under-perform the Stolt Nielsen. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mitsui OSK Lines is 2.2 times less risky than Stolt Nielsen. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Stolt Nielsen Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,461  in Stolt Nielsen Limited on October 25, 2024 and sell it today you would earn a total of  134.00  from holding Stolt Nielsen Limited or generate 5.44% 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.  Stolt Nielsen Limited

Mitsui OSK Lines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsui OSK Lines has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Stolt Nielsen Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stolt Nielsen Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Mitsui OSK and Stolt Nielsen

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

The idea behind Mitsui OSK Lines and Stolt Nielsen Limited 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.