Correlation Between First Graphene and Mitsubishi Chemical
Can any of the company-specific risk be diversified away by investing in both First Graphene 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 First Graphene and Mitsubishi Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Graphene and Mitsubishi Chemical Holdings, you can compare the effects of market volatilities on First Graphene 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 First Graphene with a short position of Mitsubishi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Graphene and Mitsubishi Chemical.
Diversification Opportunities for First Graphene and Mitsubishi Chemical
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Mitsubishi is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Graphene and Mitsubishi Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Chemical and First Graphene 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 First Graphene 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 First Graphene i.e., First Graphene and Mitsubishi Chemical go up and down completely randomly.
Pair Corralation between First Graphene and Mitsubishi Chemical
Assuming the 90 days horizon First Graphene is expected to generate 5.96 times more return on investment than Mitsubishi Chemical. However, First Graphene is 5.96 times more volatile than Mitsubishi Chemical Holdings. It trades about 0.04 of its potential returns per unit of risk. Mitsubishi Chemical Holdings is currently generating about 0.01 per unit of risk. If you would invest 6.00 in First Graphene on August 31, 2024 and sell it today you would lose (3.90) from holding First Graphene or give up 65.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Graphene vs. Mitsubishi Chemical Holdings
Performance |
| Timeline |
| First Graphene |
| Mitsubishi Chemical |
First Graphene and Mitsubishi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Graphene and Mitsubishi Chemical
The main advantage of trading using opposite First Graphene and Mitsubishi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Graphene 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.| First Graphene vs. Haydale Graphene Industries | First Graphene vs. Versarien plc | First Graphene vs. NanoXplore | First Graphene vs. G6 Materials Corp |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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