Correlation Between MITSUBISHI STEEL and Caltagirone SpA
Can any of the company-specific risk be diversified away by investing in both MITSUBISHI STEEL and Caltagirone SpA 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 Caltagirone SpA 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 Caltagirone SpA, you can compare the effects of market volatilities on MITSUBISHI STEEL and Caltagirone SpA 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 Caltagirone SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MITSUBISHI STEEL and Caltagirone SpA.
Diversification Opportunities for MITSUBISHI STEEL and Caltagirone SpA
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MITSUBISHI and Caltagirone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MITSUBISHI STEEL MFG and Caltagirone SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caltagirone SpA 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 Caltagirone SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caltagirone SpA has no effect on the direction of MITSUBISHI STEEL i.e., MITSUBISHI STEEL and Caltagirone SpA go up and down completely randomly.
Pair Corralation between MITSUBISHI STEEL and Caltagirone SpA
Assuming the 90 days horizon MITSUBISHI STEEL MFG is expected to generate 0.84 times more return on investment than Caltagirone SpA. However, MITSUBISHI STEEL MFG is 1.19 times less risky than Caltagirone SpA. It trades about 0.15 of its potential returns per unit of risk. Caltagirone SpA is currently generating about 0.1 per unit of risk. If you would invest 720.00 in MITSUBISHI STEEL MFG on November 3, 2024 and sell it today you would earn a total of 255.00 from holding MITSUBISHI STEEL MFG or generate 35.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MITSUBISHI STEEL MFG vs. Caltagirone SpA
Performance |
| Timeline |
| MITSUBISHI STEEL MFG |
| Caltagirone SpA |
MITSUBISHI STEEL and Caltagirone SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MITSUBISHI STEEL and Caltagirone SpA
The main advantage of trading using opposite MITSUBISHI STEEL and Caltagirone SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MITSUBISHI STEEL position performs unexpectedly, Caltagirone SpA 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 Caltagirone SpA will offset losses from the drop in Caltagirone SpA's long position.| MITSUBISHI STEEL vs. DIVERSIFIED ROYALTY | MITSUBISHI STEEL vs. GAMES OPERATORS SA | MITSUBISHI STEEL vs. Guangdong Investment Limited | MITSUBISHI STEEL vs. Scientific Games |
| Caltagirone SpA vs. Synovus Financial Corp | Caltagirone SpA vs. MAGIC SOFTWARE ENTR | Caltagirone SpA vs. Constellation Software | Caltagirone SpA vs. Alfa Financial Software |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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