Correlation Between COSCO SHIPPING and Orient Overseas
Can any of the company-specific risk be diversified away by investing in both COSCO SHIPPING and Orient Overseas 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 COSCO SHIPPING and Orient Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSCO SHIPPING Holdings and Orient Overseas International, you can compare the effects of market volatilities on COSCO SHIPPING and Orient Overseas 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 COSCO SHIPPING with a short position of Orient Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSCO SHIPPING and Orient Overseas.
Diversification Opportunities for COSCO SHIPPING and Orient Overseas
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between COSCO and Orient is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding COSCO SHIPPING Holdings and Orient Overseas International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas Inte and COSCO SHIPPING 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 COSCO SHIPPING Holdings are associated (or correlated) with Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas Inte has no effect on the direction of COSCO SHIPPING i.e., COSCO SHIPPING and Orient Overseas go up and down completely randomly.
Pair Corralation between COSCO SHIPPING and Orient Overseas
Assuming the 90 days horizon COSCO SHIPPING Holdings is expected to under-perform the Orient Overseas. In addition to that, COSCO SHIPPING is 1.73 times more volatile than Orient Overseas International. It trades about -0.05 of its total potential returns per unit of risk. Orient Overseas International is currently generating about -0.04 per unit of volatility. If you would invest 6,738 in Orient Overseas International on August 31, 2024 and sell it today you would lose (175.00) from holding Orient Overseas International or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSCO SHIPPING Holdings vs. Orient Overseas International
Performance |
| Timeline |
| COSCO SHIPPING Holdings |
| Orient Overseas Inte |
COSCO SHIPPING and Orient Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSCO SHIPPING and Orient Overseas
The main advantage of trading using opposite COSCO SHIPPING and Orient Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSCO SHIPPING position performs unexpectedly, Orient Overseas 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 Orient Overseas will offset losses from the drop in Orient Overseas' long position.| COSCO SHIPPING vs. Mitsui OSK Lines | COSCO SHIPPING vs. Hapag Lloyd Aktiengesellschaft | COSCO SHIPPING vs. AP Moeller Maersk AS | COSCO SHIPPING vs. Orient Overseas Limited |
| Orient Overseas vs. Hapag Lloyd Aktiengesellschaft | Orient Overseas vs. Hapag Lloyd Aktiengesellschaft | Orient Overseas vs. AP Moeller Maersk AS | Orient Overseas vs. AP Mller |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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