Correlation Between Aluminumof China and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both Aluminumof China 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 Aluminumof China and Mitsui Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and Mitsui Chemicals, you can compare the effects of market volatilities on Aluminumof China 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 Aluminumof China with a short position of Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Mitsui Chemicals.
Diversification Opportunities for Aluminumof China and Mitsui Chemicals
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aluminumof and Mitsui is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals and Aluminumof China 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 Aluminum of 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 Aluminumof China i.e., Aluminumof China and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between Aluminumof China and Mitsui Chemicals
Assuming the 90 days horizon Aluminum of is expected to generate 1.96 times more return on investment than Mitsui Chemicals. However, Aluminumof China is 1.96 times more volatile than Mitsui Chemicals. It trades about 0.06 of its potential returns per unit of risk. Mitsui Chemicals is currently generating about 0.01 per unit of risk. If you would invest 29.00 in Aluminum of on September 3, 2024 and sell it today you would earn a total of 27.00 from holding Aluminum of or generate 93.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. Mitsui Chemicals
Performance |
| Timeline |
| Aluminumof China |
| Mitsui Chemicals |
Aluminumof China and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Mitsui Chemicals
The main advantage of trading using opposite Aluminumof China and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China 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.| Aluminumof China vs. TITANIUM TRANSPORTGROUP | Aluminumof China vs. TSOGO SUN GAMING | Aluminumof China vs. Media and Games | Aluminumof China vs. UNIVMUSIC GRPADR050 |
| Mitsui Chemicals vs. DXC Technology Co | Mitsui Chemicals vs. Computer And Technologies | Mitsui Chemicals vs. SCOTT TECHNOLOGY | Mitsui Chemicals vs. Casio Computer CoLtd |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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