Correlation Between BASF SE and Mitsubishi Chemical
Can any of the company-specific risk be diversified away by investing in both BASF SE 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 BASF SE and Mitsubishi Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASF SE ADR and Mitsubishi Chemical Holdings, you can compare the effects of market volatilities on BASF SE 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 BASF SE with a short position of Mitsubishi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and Mitsubishi Chemical.
Diversification Opportunities for BASF SE and Mitsubishi Chemical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BASF and Mitsubishi is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE ADR and Mitsubishi Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Chemical and BASF SE 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 BASF SE ADR 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 BASF SE i.e., BASF SE and Mitsubishi Chemical go up and down completely randomly.
Pair Corralation between BASF SE and Mitsubishi Chemical
Assuming the 90 days horizon BASF SE ADR is expected to under-perform the Mitsubishi Chemical. But the otc stock apears to be less risky and, when comparing its historical volatility, BASF SE ADR is 1.4 times less risky than Mitsubishi Chemical. The otc stock trades about -0.01 of its potential returns per unit of risk. The Mitsubishi Chemical Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,894 in Mitsubishi Chemical Holdings on August 31, 2024 and sell it today you would lose (168.00) from holding Mitsubishi Chemical Holdings or give up 5.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BASF SE ADR vs. Mitsubishi Chemical Holdings
Performance |
| Timeline |
| BASF SE ADR |
| Mitsubishi Chemical |
BASF SE and Mitsubishi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and Mitsubishi Chemical
The main advantage of trading using opposite BASF SE and Mitsubishi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE 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.| BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. First Graphene | BASF SE vs. Huntsman |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |