Correlation Between Nippon Yusen and MPC Container

Can any of the company-specific risk be diversified away by investing in both Nippon Yusen and MPC Container 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 Nippon Yusen and MPC Container into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nippon Yusen Kabushiki and MPC Container Ships, you can compare the effects of market volatilities on Nippon Yusen and MPC Container 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 Nippon Yusen with a short position of MPC Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Yusen and MPC Container.

Diversification Opportunities for Nippon Yusen and MPC Container

-0.26

Correlation Coefficient

Nippon Yusen  MPC Container

Very good diversification

The 3 months correlation between Nippon and MPC is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Yusen Kabushiki and MPC Container Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Container Ships and Nippon Yusen 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 Nippon Yusen Kabushiki are associated (or correlated) with MPC Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Container Ships has no effect on the direction of Nippon Yusen i.e., Nippon Yusen and MPC Container go up and down completely randomly.

Pair Corralation between Nippon Yusen and MPC Container

Assuming the 90 days horizon Nippon Yusen Kabushiki is expected to generate 0.62 times more return on investment than MPC Container. However, Nippon Yusen Kabushiki is 1.62 times less risky than MPC Container. It trades about 0.07 of its potential returns per unit of risk. MPC Container Ships is currently generating about -0.03 per unit of risk. If you would invest  662.00  in Nippon Yusen Kabushiki on December 28, 2024 and sell it today you would earn a total of  38.00  from holding Nippon Yusen Kabushiki or generate 5.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Nippon Yusen Kabushiki  vs.  MPC Container Ships

Nippon Yusen Kabushiki

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Yusen Kabushiki are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nippon Yusen may actually be approaching a critical reversion point that can send shares even higher in April 2025.

MPC Container Ships

Risk-Adjusted Performance

Very Weak

Over the last 90 days MPC Container Ships has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MPC Container is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nippon Yusen and MPC Container

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

The idea behind Nippon Yusen Kabushiki and MPC Container Ships 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.