Correlation Between Orient Overseas and COSCO SHIPPING

Can any of the company-specific risk be diversified away by investing in both Orient Overseas and COSCO 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 Orient Overseas and COSCO SHIPPING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orient Overseas Limited and COSCO SHIPPING Ports, you can compare the effects of market volatilities on Orient Overseas and COSCO 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 Orient Overseas with a short position of COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Overseas and COSCO SHIPPING.

Diversification Opportunities for Orient Overseas and COSCO SHIPPING

0.75

Correlation Coefficient

Orient Overseas  COSCO SHIPPING

Poor diversification

The 3 months correlation between Orient and COSCO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Orient Overseas Limited and COSCO SHIPPING Ports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Ports and Orient Overseas 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 Orient Overseas Limited are associated (or correlated) with COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Ports has no effect on the direction of Orient Overseas i.e., Orient Overseas and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Orient Overseas and COSCO SHIPPING

Assuming the 90 days trading horizon Orient Overseas Limited is expected to generate 1.14 times more return on investment than COSCO SHIPPING. However, Orient Overseas is 1.14 times more volatile than COSCO SHIPPING Ports. It trades about 0.22 of its potential returns per unit of risk. COSCO SHIPPING Ports is currently generating about 0.22 per unit of risk. If you would invest  1,123  in Orient Overseas Limited on April 25, 2025 and sell it today you would earn a total of  404.00  from holding Orient Overseas Limited or generate 35.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Orient Overseas Limited  vs.  COSCO SHIPPING Ports

Orient Overseas

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Overseas Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Orient Overseas reported solid returns over the last few months and may actually be approaching a breakup point.

COSCO SHIPPING Ports

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Ports are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COSCO SHIPPING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orient Overseas and COSCO SHIPPING

The main advantage of trading using opposite Orient Overseas and COSCO SHIPPING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Overseas position performs unexpectedly, COSCO 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 COSCO SHIPPING will offset losses from the drop in COSCO SHIPPING's long position.

The idea behind Orient Overseas Limited and COSCO SHIPPING Ports 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.