Correlation Between Stolt Nielsen and Kawasaki Kisen
Can any of the company-specific risk be diversified away by investing in both Stolt Nielsen and Kawasaki Kisen 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 Stolt Nielsen and Kawasaki Kisen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stolt Nielsen Limited and Kawasaki Kisen Kaisha, you can compare the effects of market volatilities on Stolt Nielsen and Kawasaki Kisen 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 Stolt Nielsen with a short position of Kawasaki Kisen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stolt Nielsen and Kawasaki Kisen.
Diversification Opportunities for Stolt Nielsen and Kawasaki Kisen
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stolt and Kawasaki is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited and Kawasaki Kisen Kaisha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kawasaki Kisen Kaisha and Stolt Nielsen 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 Stolt Nielsen Limited are associated (or correlated) with Kawasaki Kisen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kawasaki Kisen Kaisha has no effect on the direction of Stolt Nielsen i.e., Stolt Nielsen and Kawasaki Kisen go up and down completely randomly.
Pair Corralation between Stolt Nielsen and Kawasaki Kisen
Assuming the 90 days horizon Stolt Nielsen Limited is expected to under-perform the Kawasaki Kisen. In addition to that, Stolt Nielsen is 2.53 times more volatile than Kawasaki Kisen Kaisha. It trades about -0.05 of its total potential returns per unit of risk. Kawasaki Kisen Kaisha is currently generating about -0.11 per unit of volatility. If you would invest 1,470 in Kawasaki Kisen Kaisha on September 13, 2024 and sell it today you would lose (60.00) from holding Kawasaki Kisen Kaisha or give up 4.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stolt Nielsen Limited vs. Kawasaki Kisen Kaisha
Performance |
| Timeline |
| Stolt Nielsen Limited |
| Kawasaki Kisen Kaisha |
Stolt Nielsen and Kawasaki Kisen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stolt Nielsen and Kawasaki Kisen
The main advantage of trading using opposite Stolt Nielsen and Kawasaki Kisen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stolt Nielsen position performs unexpectedly, Kawasaki Kisen 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 Kawasaki Kisen will offset losses from the drop in Kawasaki Kisen's long position.| Stolt Nielsen vs. Hapag Lloyd Aktiengesellschaft | Stolt Nielsen vs. Nippon Yusen Kabushiki | Stolt Nielsen vs. COSCO SHIPPING Holdings | Stolt Nielsen vs. AP Moeller |
| Kawasaki Kisen vs. Pacific Basin Shipping | Kawasaki Kisen vs. Hapag Lloyd Aktiengesellschaft | Kawasaki Kisen vs. Hapag Lloyd Aktiengesellschaft | Kawasaki Kisen vs. Hutchison Port 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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