Correlation Between Plastic Omnium and Mitsubishi Materials
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and Mitsubishi Materials 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 Plastic Omnium and Mitsubishi Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and Mitsubishi Materials, you can compare the effects of market volatilities on Plastic Omnium and Mitsubishi Materials 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 Plastic Omnium with a short position of Mitsubishi Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and Mitsubishi Materials.
Diversification Opportunities for Plastic Omnium and Mitsubishi Materials
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Plastic and Mitsubishi is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and Mitsubishi Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Materials and Plastic Omnium 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 Plastic Omnium are associated (or correlated) with Mitsubishi Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Materials has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and Mitsubishi Materials go up and down completely randomly.
Pair Corralation between Plastic Omnium and Mitsubishi Materials
Assuming the 90 days trading horizon Plastic Omnium is expected to under-perform the Mitsubishi Materials. In addition to that, Plastic Omnium is 1.37 times more volatile than Mitsubishi Materials. It trades about -0.02 of its total potential returns per unit of risk. Mitsubishi Materials is currently generating about 0.01 per unit of volatility. If you would invest 1,500 in Mitsubishi Materials on August 29, 2024 and sell it today you would lose (10.00) from holding Mitsubishi Materials or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. Mitsubishi Materials
Performance |
| Timeline |
| Plastic Omnium |
| Mitsubishi Materials |
Plastic Omnium and Mitsubishi Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and Mitsubishi Materials
The main advantage of trading using opposite Plastic Omnium and Mitsubishi Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, Mitsubishi Materials 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 Materials will offset losses from the drop in Mitsubishi Materials' long position.| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
| Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Superior Plus Corp | Mitsubishi Materials vs. SIVERS SEMICONDUCTORS AB |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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