Correlation Between MITSUBISHI STEEL and Datang International
Can any of the company-specific risk be diversified away by investing in both MITSUBISHI STEEL and Datang International 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 MITSUBISHI STEEL and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MITSUBISHI STEEL MFG and Datang International Power, you can compare the effects of market volatilities on MITSUBISHI STEEL and Datang International 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 MITSUBISHI STEEL with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of MITSUBISHI STEEL and Datang International.
Diversification Opportunities for MITSUBISHI STEEL and Datang International
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between MITSUBISHI and Datang is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding MITSUBISHI STEEL MFG and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and MITSUBISHI STEEL 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 MITSUBISHI STEEL MFG are associated (or correlated) with Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of MITSUBISHI STEEL i.e., MITSUBISHI STEEL and Datang International go up and down completely randomly.
Pair Corralation between MITSUBISHI STEEL and Datang International
Assuming the 90 days horizon MITSUBISHI STEEL MFG is expected to generate 0.47 times more return on investment than Datang International. However, MITSUBISHI STEEL MFG is 2.14 times less risky than Datang International. It trades about 0.34 of its potential returns per unit of risk. Datang International Power is currently generating about -0.08 per unit of risk. If you would invest 780.00 in MITSUBISHI STEEL MFG on September 1, 2024 and sell it today you would earn a total of 80.00 from holding MITSUBISHI STEEL MFG or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MITSUBISHI STEEL MFG vs. Datang International Power
Performance |
| Timeline |
| MITSUBISHI STEEL MFG |
| Datang International |
MITSUBISHI STEEL and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MITSUBISHI STEEL and Datang International
The main advantage of trading using opposite MITSUBISHI STEEL and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MITSUBISHI STEEL position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.| MITSUBISHI STEEL vs. Apple Inc | MITSUBISHI STEEL vs. Apple Inc | MITSUBISHI STEEL vs. Apple Inc | MITSUBISHI STEEL vs. Apple Inc |
| Datang International vs. TransAlta | Datang International vs. Superior Plus Corp | Datang International vs. NMI Holdings | Datang International vs. Origin Agritech |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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