Correlation Between Nippon Yusen and Global Ship

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Can any of the company-specific risk be diversified away by investing in both Nippon Yusen and Global Ship 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 Global Ship 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 Global Ship Lease, you can compare the effects of market volatilities on Nippon Yusen and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Yusen and Global Ship.

Diversification Opportunities for Nippon Yusen and Global Ship

NipponGlobalDiversified AwayNipponGlobalDiversified Away100%
0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nippon and Global is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Yusen Kabushiki and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Nippon Yusen i.e., Nippon Yusen and Global Ship go up and down completely randomly.

Pair Corralation between Nippon Yusen and Global Ship

Assuming the 90 days horizon Nippon Yusen Kabushiki is expected to generate 1.25 times more return on investment than Global Ship. However, Nippon Yusen is 1.25 times more volatile than Global Ship Lease. It trades about 0.04 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.03 per unit of risk. If you would invest  520.00  in Nippon Yusen Kabushiki on November 26, 2024 and sell it today you would earn a total of  190.00  from holding Nippon Yusen Kabushiki or generate 36.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Nippon Yusen Kabushiki  vs.  Global Ship Lease

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-5051015
JavaScript chart by amCharts 3.21.15NPNYY GSL
       Timeline  
Nippon Yusen Kabushiki 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Yusen Kabushiki are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nippon Yusen showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb66.26.46.66.877.2
Global Ship Lease 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Global Ship is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2121.52222.523

Nippon Yusen and Global Ship Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.96-4.46-2.97-1.47-0.02491.523.084.656.227.79 0.050.100.150.20
JavaScript chart by amCharts 3.21.15NPNYY GSL
       Returns  

Pair Trading with Nippon Yusen and Global Ship

The main advantage of trading using opposite Nippon Yusen and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Yusen position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.
The idea behind Nippon Yusen Kabushiki and Global Ship Lease pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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