Correlation Between Kawasaki Kisen and Pacific Basin
Can any of the company-specific risk be diversified away by investing in both Kawasaki Kisen and Pacific Basin 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 Kawasaki Kisen and Pacific Basin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawasaki Kisen Kaisha and Pacific Basin Shipping, you can compare the effects of market volatilities on Kawasaki Kisen and Pacific Basin 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 Kawasaki Kisen with a short position of Pacific Basin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasaki Kisen and Pacific Basin.
Diversification Opportunities for Kawasaki Kisen and Pacific Basin
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kawasaki and Pacific is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kawasaki Kisen Kaisha and Pacific Basin Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Basin Shipping and Kawasaki Kisen 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 Kawasaki Kisen Kaisha are associated (or correlated) with Pacific Basin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Basin Shipping has no effect on the direction of Kawasaki Kisen i.e., Kawasaki Kisen and Pacific Basin go up and down completely randomly.
Pair Corralation between Kawasaki Kisen and Pacific Basin
Assuming the 90 days horizon Kawasaki Kisen Kaisha is expected to generate 4.33 times more return on investment than Pacific Basin. However, Kawasaki Kisen is 4.33 times more volatile than Pacific Basin Shipping. It trades about 0.09 of its potential returns per unit of risk. Pacific Basin Shipping is currently generating about 0.01 per unit of risk. If you would invest 932.00 in Kawasaki Kisen Kaisha on August 31, 2024 and sell it today you would earn a total of 538.00 from holding Kawasaki Kisen Kaisha or generate 57.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.84% |
| Values | Daily Returns |
Kawasaki Kisen Kaisha vs. Pacific Basin Shipping
Performance |
| Timeline |
| Kawasaki Kisen Kaisha |
| Pacific Basin Shipping |
Kawasaki Kisen and Pacific Basin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawasaki Kisen and Pacific Basin
The main advantage of trading using opposite Kawasaki Kisen and Pacific Basin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawasaki Kisen position performs unexpectedly, Pacific Basin 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 Pacific Basin will offset losses from the drop in Pacific Basin's long position.| Kawasaki Kisen vs. Hapag Lloyd Aktiengesellschaft | Kawasaki Kisen vs. Hapag Lloyd Aktiengesellschaft | Kawasaki Kisen vs. AP Moeller Maersk AS | Kawasaki Kisen vs. AP Mller |
| Pacific Basin vs. Kawasaki Kisen Kaisha | Pacific Basin vs. Hapag Lloyd Aktiengesellschaft | Pacific Basin vs. Hapag Lloyd Aktiengesellschaft | Pacific Basin vs. SITC International Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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