Correlation Between Oriental Land and Carnival Plc

Can any of the company-specific risk be diversified away by investing in both Oriental Land and Carnival Plc 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 Oriental Land and Carnival Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oriental Land Co and Carnival Plc ADS, you can compare the effects of market volatilities on Oriental Land and Carnival Plc 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 Oriental Land with a short position of Carnival Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Land and Carnival Plc.

Diversification Opportunities for Oriental Land and Carnival Plc

-0.28

Correlation Coefficient

Oriental Land  Carnival Plc

Very good diversification

The 3 months correlation between Oriental and Carnival is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Land Co and Carnival Plc ADS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival Plc ADS and Oriental Land 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 Oriental Land Co are associated (or correlated) with Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival Plc ADS has no effect on the direction of Oriental Land i.e., Oriental Land and Carnival Plc go up and down completely randomly.

Pair Corralation between Oriental Land and Carnival Plc

Assuming the 90 days horizon Oriental Land Co is expected to generate 0.93 times more return on investment than Carnival Plc. However, Oriental Land Co is 1.08 times less risky than Carnival Plc. It trades about -0.07 of its potential returns per unit of risk. Carnival Plc ADS is currently generating about -0.12 per unit of risk. If you would invest  2,121  in Oriental Land Co on December 24, 2024 and sell it today you would lose (279.00) from holding Oriental Land Co or give up 13.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Oriental Land Co  vs.  Carnival Plc ADS

Oriental Land

Risk-Adjusted Performance

Very Weak

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

Carnival Plc ADS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival Plc ADS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Oriental Land and Carnival Plc

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

The idea behind Oriental Land Co and Carnival Plc ADS 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.