Correlation Between AP Mller and Mitsui OSK
Can any of the company-specific risk be diversified away by investing in both AP Mller and Mitsui OSK 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 AP Mller and Mitsui OSK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and Mitsui OSK Lines, you can compare the effects of market volatilities on AP Mller and Mitsui OSK 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 AP Mller with a short position of Mitsui OSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and Mitsui OSK.
Diversification Opportunities for AP Mller and Mitsui OSK
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMKBF and Mitsui is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Mitsui OSK Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui OSK Lines and AP Mller 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 AP Mller are associated (or correlated) with Mitsui OSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui OSK Lines has no effect on the direction of AP Mller i.e., AP Mller and Mitsui OSK go up and down completely randomly.
Pair Corralation between AP Mller and Mitsui OSK
Assuming the 90 days horizon AP Mller is expected to generate 1.25 times more return on investment than Mitsui OSK. However, AP Mller is 1.25 times more volatile than Mitsui OSK Lines. It trades about 0.26 of its potential returns per unit of risk. Mitsui OSK Lines is currently generating about 0.22 per unit of risk. If you would invest 147,979 in AP Mller on August 27, 2024 and sell it today you would earn a total of 18,572 from holding AP Mller or generate 12.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AP Mller vs. Mitsui OSK Lines
Performance |
| Timeline |
| AP Mller |
| Mitsui OSK Lines |
AP Mller and Mitsui OSK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Mller and Mitsui OSK
The main advantage of trading using opposite AP Mller and Mitsui OSK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, Mitsui OSK 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 Mitsui OSK will offset losses from the drop in Mitsui OSK's long position.The idea behind AP Mller and Mitsui OSK Lines 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.| Mitsui OSK vs. SITC International Holdings | Mitsui OSK vs. Orient Overseas Limited | Mitsui OSK vs. Western Bulk Chartering | Mitsui OSK vs. Hapag Lloyd Aktiengesellschaft |
Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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