Correlation Between Nippon Yusen and Qingdao Port

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

Diversification Opportunities for Nippon Yusen and Qingdao Port

-0.22

Correlation Coefficient

Nippon Yusen  Qingdao Port

Very good diversification

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

Pair Corralation between Nippon Yusen and Qingdao Port

Assuming the 90 days trading horizon Nippon Yusen Kabushiki is expected to generate 1.24 times more return on investment than Qingdao Port. However, Nippon Yusen is 1.24 times more volatile than Qingdao Port International. It trades about 0.07 of its potential returns per unit of risk. Qingdao Port International is currently generating about -0.04 per unit of risk. If you would invest  3,026  in Nippon Yusen Kabushiki on December 22, 2024 and sell it today you would earn a total of  215.00  from holding Nippon Yusen Kabushiki or generate 7.11% return on investment over 90 days.

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

Nippon Yusen Kabushiki  vs.  Qingdao Port International

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. Despite nearly uncertain forward-looking signals, Nippon Yusen may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Qingdao Port Interna

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qingdao Port International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Qingdao Port 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 Qingdao Port

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

The idea behind Nippon Yusen Kabushiki and Qingdao Port International 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.