Correlation Between Nippon Yusen and American Shipping
Can any of the company-specific risk be diversified away by investing in both Nippon Yusen and American Shipping 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 Nippon Yusen and American Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Yusen Kabushiki and American Shipping, you can compare the effects of market volatilities on Nippon Yusen and American Shipping 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 Nippon Yusen with a short position of American Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Yusen and American Shipping.
Diversification Opportunities for Nippon Yusen and American Shipping
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nippon and American is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Yusen Kabushiki and American Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shipping and Nippon Yusen 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 Nippon Yusen Kabushiki are associated (or correlated) with American Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shipping has no effect on the direction of Nippon Yusen i.e., Nippon Yusen and American Shipping go up and down completely randomly.
Pair Corralation between Nippon Yusen and American Shipping
Assuming the 90 days horizon Nippon Yusen Kabushiki is expected to generate 1.37 times more return on investment than American Shipping. However, Nippon Yusen is 1.37 times more volatile than American Shipping. It trades about -0.12 of its potential returns per unit of risk. American Shipping is currently generating about -0.25 per unit of risk. If you would invest 665.00 in Nippon Yusen Kabushiki on August 26, 2024 and sell it today you would lose (34.00) from holding Nippon Yusen Kabushiki or give up 5.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nippon Yusen Kabushiki vs. American Shipping
Performance |
| Timeline |
| Nippon Yusen Kabushiki |
| American Shipping |
Nippon Yusen and American Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Yusen and American Shipping
The main advantage of trading using opposite Nippon Yusen and American Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Yusen position performs unexpectedly, American Shipping 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 American Shipping will offset losses from the drop in American Shipping's long position.| Nippon Yusen vs. AP Mller | Nippon Yusen vs. COSCO SHIPPING Holdings | Nippon Yusen vs. Orient Overseas Limited |
| American Shipping vs. Western Bulk Chartering | American Shipping vs. AP Moeller | American Shipping vs. AP Mller | American Shipping vs. Pacific Basin Shipping |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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