Correlation Between Chuangs China and Mitsubishi
Can any of the company-specific risk be diversified away by investing in both Chuangs China and Mitsubishi 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 Chuangs China and Mitsubishi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chuangs China Investments and Mitsubishi, you can compare the effects of market volatilities on Chuangs China and Mitsubishi 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 Chuangs China with a short position of Mitsubishi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Mitsubishi.
Diversification Opportunities for Chuangs China and Mitsubishi
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chuangs and Mitsubishi is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and Mitsubishi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi and Chuangs 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 Chuangs China Investments are associated (or correlated) with Mitsubishi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi has no effect on the direction of Chuangs China i.e., Chuangs China and Mitsubishi go up and down completely randomly.
Pair Corralation between Chuangs China and Mitsubishi
Assuming the 90 days horizon Chuangs China Investments is expected to under-perform the Mitsubishi. In addition to that, Chuangs China is 2.22 times more volatile than Mitsubishi. It trades about -0.01 of its total potential returns per unit of risk. Mitsubishi is currently generating about 0.05 per unit of volatility. If you would invest 1,032 in Mitsubishi on September 3, 2024 and sell it today you would earn a total of 533.00 from holding Mitsubishi or generate 51.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chuangs China Investments vs. Mitsubishi
Performance |
| Timeline |
| Chuangs China Investments |
| Mitsubishi |
Chuangs China and Mitsubishi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and Mitsubishi
The main advantage of trading using opposite Chuangs China and Mitsubishi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, Mitsubishi 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 will offset losses from the drop in Mitsubishi's long position.| Chuangs China vs. Treasury Wine Estates | Chuangs China vs. GigaMedia | Chuangs China vs. NAKED WINES PLC | Chuangs China vs. Tencent Music Entertainment |
| Mitsubishi vs. New Residential Investment | Mitsubishi vs. Chuangs China Investments | Mitsubishi vs. Singapore Telecommunications Limited | Mitsubishi vs. SBA Communications Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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