Correlation Between Asahi Kaisei and Mitsubishi Chemical
Can any of the company-specific risk be diversified away by investing in both Asahi Kaisei and Mitsubishi Chemical 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 Asahi Kaisei and Mitsubishi Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asahi Kaisei Corp and Mitsubishi Chemical Holdings, you can compare the effects of market volatilities on Asahi Kaisei and Mitsubishi Chemical 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 Asahi Kaisei with a short position of Mitsubishi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Kaisei and Mitsubishi Chemical.
Diversification Opportunities for Asahi Kaisei and Mitsubishi Chemical
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asahi and Mitsubishi is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Kaisei Corp and Mitsubishi Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Chemical and Asahi Kaisei 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 Asahi Kaisei Corp are associated (or correlated) with Mitsubishi Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Chemical has no effect on the direction of Asahi Kaisei i.e., Asahi Kaisei and Mitsubishi Chemical go up and down completely randomly.
Pair Corralation between Asahi Kaisei and Mitsubishi Chemical
Assuming the 90 days horizon Asahi Kaisei Corp is expected to under-perform the Mitsubishi Chemical. But the pink sheet apears to be less risky and, when comparing its historical volatility, Asahi Kaisei Corp is 1.4 times less risky than Mitsubishi Chemical. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Mitsubishi Chemical Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,545 in Mitsubishi Chemical Holdings on November 3, 2024 and sell it today you would earn a total of 55.00 from holding Mitsubishi Chemical Holdings or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asahi Kaisei Corp vs. Mitsubishi Chemical Holdings
Performance |
| Timeline |
| Asahi Kaisei Corp |
| Mitsubishi Chemical |
Asahi Kaisei and Mitsubishi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asahi Kaisei and Mitsubishi Chemical
The main advantage of trading using opposite Asahi Kaisei and Mitsubishi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asahi Kaisei position performs unexpectedly, Mitsubishi Chemical 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 Chemical will offset losses from the drop in Mitsubishi Chemical's long position.| Asahi Kaisei vs. Altech Batteries Limited | Asahi Kaisei vs. Alumifuel Pwr Corp | Asahi Kaisei vs. ASP Isotopes Common | Asahi Kaisei vs. AdvanSix |
| Mitsubishi Chemical vs. Sumitomo Chemical Co | Mitsubishi Chemical vs. Asahi Kaisei Corp | Mitsubishi Chemical vs. Nitto Denko Corp | Mitsubishi Chemical vs. Shin Etsu Chemical Co |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |