Correlation Between Mitsui OSK and Orient Overseas
Can any of the company-specific risk be diversified away by investing in both Mitsui OSK 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 Mitsui OSK and Orient Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui OSK Lines and Orient Overseas Limited, you can compare the effects of market volatilities on Mitsui OSK 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 Mitsui OSK with a short position of Orient Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui OSK and Orient Overseas.
Diversification Opportunities for Mitsui OSK and Orient Overseas
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mitsui and Orient is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui OSK Lines and Orient Overseas Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas and Mitsui OSK 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 Mitsui OSK Lines 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 has no effect on the direction of Mitsui OSK i.e., Mitsui OSK and Orient Overseas go up and down completely randomly.
Pair Corralation between Mitsui OSK and Orient Overseas
Assuming the 90 days horizon Mitsui OSK Lines is expected to generate 4.46 times more return on investment than Orient Overseas. However, Mitsui OSK is 4.46 times more volatile than Orient Overseas Limited. It trades about 0.22 of its potential returns per unit of risk. Orient Overseas Limited is currently generating about 0.22 per unit of risk. If you would invest 1,628 in Mitsui OSK Lines on August 27, 2024 and sell it today you would earn a total of 138.00 from holding Mitsui OSK Lines or generate 8.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsui OSK Lines vs. Orient Overseas Limited
Performance |
| Timeline |
| Mitsui OSK Lines |
| Orient Overseas |
Mitsui OSK and Orient Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui OSK and Orient Overseas
The main advantage of trading using opposite Mitsui OSK and Orient Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui OSK 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.| Mitsui OSK vs. SITC International Holdings | Mitsui OSK vs. Orient Overseas Limited | Mitsui OSK vs. Western Bulk Chartering | Mitsui OSK vs. Hapag Lloyd Aktiengesellschaft |
| Orient Overseas vs. SITC International Holdings | Orient Overseas vs. COSCO SHIPPING Holdings | Orient Overseas vs. Pacific Basin Shipping | Orient Overseas 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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