Correlation Between Nippon Yusen and China Merchants
Can any of the company-specific risk be diversified away by investing in both Nippon Yusen and China Merchants 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 China Merchants 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 China Merchants Port, you can compare the effects of market volatilities on Nippon Yusen and China Merchants 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 China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Yusen and China Merchants.
Diversification Opportunities for Nippon Yusen and China Merchants
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nippon and China is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Yusen Kabushiki and China Merchants Port in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Port 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 China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Port has no effect on the direction of Nippon Yusen i.e., Nippon Yusen and China Merchants go up and down completely randomly.
Pair Corralation between Nippon Yusen and China Merchants
Assuming the 90 days trading horizon Nippon Yusen Kabushiki is expected to under-perform the China Merchants. But the stock apears to be less risky and, when comparing its historical volatility, Nippon Yusen Kabushiki is 1.5 times less risky than China Merchants. The stock trades about -0.01 of its potential returns per unit of risk. The China Merchants Port is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 114.00 in China Merchants Port on November 2, 2024 and sell it today you would earn a total of 43.00 from holding China Merchants Port or generate 37.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nippon Yusen Kabushiki vs. China Merchants Port
Performance |
| Timeline |
| Nippon Yusen Kabushiki |
| China Merchants Port |
Nippon Yusen and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Yusen and China Merchants
The main advantage of trading using opposite Nippon Yusen and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Yusen position performs unexpectedly, China Merchants 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 China Merchants will offset losses from the drop in China Merchants' long position.| Nippon Yusen vs. Mitsui OSK Lines | Nippon Yusen vs. Superior Plus Corp | Nippon Yusen vs. Origin Agritech | Nippon Yusen vs. Identiv |
| China Merchants vs. MCEWEN MINING INC | China Merchants vs. Calibre Mining Corp | China Merchants vs. Coeur Mining | China Merchants vs. Safety Insurance Group |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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