Correlation Between Mitsui OSK and ZIM Integrated

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

Diversification Opportunities for Mitsui OSK and ZIM Integrated

0.66

Correlation Coefficient

Mitsui OSK  ZIM Integrated

Poor diversification

The 3 months correlation between Mitsui and ZIM is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui OSK Lines and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping 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 ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of Mitsui OSK i.e., Mitsui OSK and ZIM Integrated go up and down completely randomly.

Pair Corralation between Mitsui OSK and ZIM Integrated

Assuming the 90 days horizon Mitsui OSK is expected to generate 1.68 times less return on investment than ZIM Integrated. But when comparing it to its historical volatility, Mitsui OSK Lines is 2.22 times less risky than ZIM Integrated. It trades about 0.04 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,305  in ZIM Integrated Shipping on October 25, 2024 and sell it today you would earn a total of  319.00  from holding ZIM Integrated Shipping or generate 24.44% return on investment over 90 days.

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

Mitsui OSK Lines  vs.  ZIM Integrated Shipping

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.

ZIM Integrated Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZIM Integrated Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Mitsui OSK and ZIM Integrated

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

The idea behind Mitsui OSK Lines and ZIM Integrated Shipping 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.