Correlation Between China Construction and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both China Construction and Mitsubishi UFJ 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 China Construction and Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Construction Bank and Mitsubishi UFJ Financial, you can compare the effects of market volatilities on China Construction and Mitsubishi UFJ 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 China Construction with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Mitsubishi UFJ.
Diversification Opportunities for China Construction and Mitsubishi UFJ
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Mitsubishi is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial and China Construction 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 China Construction Bank are associated (or correlated) with Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Financial has no effect on the direction of China Construction i.e., China Construction and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between China Construction and Mitsubishi UFJ
Assuming the 90 days horizon China Construction is expected to generate 1.97 times less return on investment than Mitsubishi UFJ. In addition to that, China Construction is 1.45 times more volatile than Mitsubishi UFJ Financial. It trades about 0.05 of its total potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.13 per unit of volatility. If you would invest 978.00 in Mitsubishi UFJ Financial on October 26, 2024 and sell it today you would earn a total of 247.00 from holding Mitsubishi UFJ Financial or generate 25.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. Mitsubishi UFJ Financial
Performance |
| Timeline |
| China Construction Bank |
| Mitsubishi UFJ Financial |
China Construction and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Mitsubishi UFJ
The main advantage of trading using opposite China Construction and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Mitsubishi UFJ 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 UFJ will offset losses from the drop in Mitsubishi UFJ's long position.| China Construction vs. Svenska Handelsbanken PK | China Construction vs. Industrial and Commercial | China Construction vs. Bank of America | China Construction vs. Bank of America |
| Mitsubishi UFJ vs. Banco Bilbao Vizcaya | Mitsubishi UFJ vs. ABN AMRO Bank | Mitsubishi UFJ vs. ING Groep NV | Mitsubishi UFJ vs. Banco de Sabadell |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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