Correlation Between China Merchants and Kawasaki Kisen
Can any of the company-specific risk be diversified away by investing in both China Merchants and Kawasaki Kisen 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 China Merchants and Kawasaki Kisen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Merchants Port and Kawasaki Kisen Kaisha, you can compare the effects of market volatilities on China Merchants and Kawasaki Kisen 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 China Merchants with a short position of Kawasaki Kisen. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Kawasaki Kisen.
Diversification Opportunities for China Merchants and Kawasaki Kisen
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Kawasaki is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Port and Kawasaki Kisen Kaisha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kawasaki Kisen Kaisha and China Merchants 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 China Merchants Port are associated (or correlated) with Kawasaki Kisen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kawasaki Kisen Kaisha has no effect on the direction of China Merchants i.e., China Merchants and Kawasaki Kisen go up and down completely randomly.
Pair Corralation between China Merchants and Kawasaki Kisen
Assuming the 90 days horizon China Merchants Port is expected to generate 0.77 times more return on investment than Kawasaki Kisen. However, China Merchants Port is 1.29 times less risky than Kawasaki Kisen. It trades about 0.04 of its potential returns per unit of risk. Kawasaki Kisen Kaisha is currently generating about -0.06 per unit of risk. If you would invest 154.00 in China Merchants Port on October 20, 2024 and sell it today you would earn a total of 2.00 from holding China Merchants Port or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Port vs. Kawasaki Kisen Kaisha
Performance |
| Timeline |
| China Merchants Port |
| Kawasaki Kisen Kaisha |
China Merchants and Kawasaki Kisen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Kawasaki Kisen
The main advantage of trading using opposite China Merchants and Kawasaki Kisen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, Kawasaki Kisen 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 Kawasaki Kisen will offset losses from the drop in Kawasaki Kisen's long position.| China Merchants vs. Nippon Yusen Kabushiki | China Merchants vs. Hapag Lloyd AG | China Merchants vs. Orient Overseas Limited | China Merchants vs. Mitsui OSK Lines |
| Kawasaki Kisen vs. Nippon Yusen Kabushiki | Kawasaki Kisen vs. Hapag Lloyd AG | Kawasaki Kisen vs. Orient Overseas Limited | Kawasaki Kisen vs. Mitsui OSK Lines |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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