Correlation Between AFC Energy and Mitsubishi Electric
Can any of the company-specific risk be diversified away by investing in both AFC Energy and Mitsubishi Electric 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 AFC Energy and Mitsubishi Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AFC Energy plc and Mitsubishi Electric, you can compare the effects of market volatilities on AFC Energy and Mitsubishi Electric 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 AFC Energy with a short position of Mitsubishi Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Energy and Mitsubishi Electric.
Diversification Opportunities for AFC Energy and Mitsubishi Electric
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AFC and Mitsubishi is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and Mitsubishi Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Electric and AFC Energy 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 AFC Energy plc are associated (or correlated) with Mitsubishi Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Electric has no effect on the direction of AFC Energy i.e., AFC Energy and Mitsubishi Electric go up and down completely randomly.
Pair Corralation between AFC Energy and Mitsubishi Electric
Assuming the 90 days horizon AFC Energy plc is expected to under-perform the Mitsubishi Electric. In addition to that, AFC Energy is 1.34 times more volatile than Mitsubishi Electric. It trades about -0.05 of its total potential returns per unit of risk. Mitsubishi Electric is currently generating about 0.04 per unit of volatility. If you would invest 1,715 in Mitsubishi Electric on September 3, 2024 and sell it today you would earn a total of 26.00 from holding Mitsubishi Electric or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AFC Energy plc vs. Mitsubishi Electric
Performance |
| Timeline |
| AFC Energy plc |
| Mitsubishi Electric |
AFC Energy and Mitsubishi Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFC Energy and Mitsubishi Electric
The main advantage of trading using opposite AFC Energy and Mitsubishi Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Energy position performs unexpectedly, Mitsubishi Electric 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 Mitsubishi Electric will offset losses from the drop in Mitsubishi Electric's long position.| AFC Energy vs. Legrand SA ADR | AFC Energy vs. Loop Energy | AFC Energy vs. Sunrise New Energy | AFC Energy vs. Alfen NV |
| Mitsubishi Electric vs. Yaskawa Electric Corp | Mitsubishi Electric vs. Legrand SA ADR | Mitsubishi Electric vs. Fuji Electric Co | Mitsubishi Electric vs. RF Industries |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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