Correlation Between American Public and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both American Public and Mitsui Chemicals 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 American Public and Mitsui Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Public Education and Mitsui Chemicals, you can compare the effects of market volatilities on American Public and Mitsui Chemicals 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 American Public with a short position of Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and Mitsui Chemicals.
Diversification Opportunities for American Public and Mitsui Chemicals
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Mitsui is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals and American Public 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 American Public Education are associated (or correlated) with Mitsui Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Chemicals has no effect on the direction of American Public i.e., American Public and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between American Public and Mitsui Chemicals
Assuming the 90 days horizon American Public Education is expected to generate 2.01 times more return on investment than Mitsui Chemicals. However, American Public is 2.01 times more volatile than Mitsui Chemicals. It trades about 0.43 of its potential returns per unit of risk. Mitsui Chemicals is currently generating about 0.18 per unit of risk. If you would invest 1,360 in American Public Education on August 28, 2024 and sell it today you would earn a total of 580.00 from holding American Public Education or generate 42.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. Mitsui Chemicals
Performance |
| Timeline |
| American Public Education |
| Mitsui Chemicals |
American Public and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and Mitsui Chemicals
The main advantage of trading using opposite American Public and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public position performs unexpectedly, Mitsui Chemicals 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 Mitsui Chemicals will offset losses from the drop in Mitsui Chemicals' long position.| American Public vs. AIR PRODCHEMICALS | American Public vs. Sanyo Chemical Industries | American Public vs. Quaker Chemical | American Public vs. FORMPIPE SOFTWARE AB |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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