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

-0.81

Correlation Coefficient

Oriental Land  Carnival Plc

Pay attention - limited upside

The 3 months correlation between Oriental and Carnival is -0.81. 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 under-perform the Carnival Plc. But the pink sheet apears to be less risky and, when comparing its historical volatility, Oriental Land Co is 1.43 times less risky than Carnival Plc. The pink sheet trades about -0.18 of its potential returns per unit of risk. The Carnival Plc ADS is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,604  in Carnival Plc ADS on September 14, 2024 and sell it today you would earn a total of  777.00  from holding Carnival Plc ADS or generate 48.44% return on investment over 90 days.

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

Oriental Land Co  vs.  Carnival Plc ADS

Oriental Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oriental Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Carnival Plc ADS

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carnival Plc ADS are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Carnival Plc disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.