Correlation Between Liaoning Port and Kawasaki Kisen
Can any of the company-specific risk be diversified away by investing in both Liaoning Port 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 Liaoning Port and Kawasaki Kisen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liaoning Port CoLtd and Kawasaki Kisen Kaisha, you can compare the effects of market volatilities on Liaoning Port 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 Liaoning Port with a short position of Kawasaki Kisen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liaoning Port and Kawasaki Kisen.
Diversification Opportunities for Liaoning Port and Kawasaki Kisen
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Liaoning and Kawasaki is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Liaoning Port CoLtd 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 Liaoning Port 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 Liaoning Port CoLtd 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 Liaoning Port i.e., Liaoning Port and Kawasaki Kisen go up and down completely randomly.
Pair Corralation between Liaoning Port and Kawasaki Kisen
Assuming the 90 days horizon Liaoning Port CoLtd is expected to generate 0.39 times more return on investment than Kawasaki Kisen. However, Liaoning Port CoLtd is 2.59 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 7.85 in Liaoning Port CoLtd on October 20, 2024 and sell it today you would earn a total of 0.05 from holding Liaoning Port CoLtd or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liaoning Port CoLtd vs. Kawasaki Kisen Kaisha
Performance |
| Timeline |
| Liaoning Port CoLtd |
| Kawasaki Kisen Kaisha |
Liaoning Port and Kawasaki Kisen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liaoning Port and Kawasaki Kisen
The main advantage of trading using opposite Liaoning Port and Kawasaki Kisen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liaoning Port 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.| Liaoning Port vs. Nippon Yusen Kabushiki | Liaoning Port vs. Hapag Lloyd AG | Liaoning Port vs. Orient Overseas Limited | Liaoning Port 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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