Correlation Between GM and Mitsui Mining
Can any of the company-specific risk be diversified away by investing in both GM and Mitsui Mining 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 GM and Mitsui Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Mitsui Mining Smelting, you can compare the effects of market volatilities on GM and Mitsui Mining 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 GM with a short position of Mitsui Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Mitsui Mining.
Diversification Opportunities for GM and Mitsui Mining
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Mitsui is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mitsui Mining Smelting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Mining Smelting and GM 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 General Motors are associated (or correlated) with Mitsui Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Mining Smelting has no effect on the direction of GM i.e., GM and Mitsui Mining go up and down completely randomly.
Pair Corralation between GM and Mitsui Mining
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.19 times more return on investment than Mitsui Mining. However, General Motors is 5.17 times less risky than Mitsui Mining. It trades about 0.05 of its potential returns per unit of risk. Mitsui Mining Smelting is currently generating about -0.1 per unit of risk. If you would invest 3,762 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,742 from holding General Motors or generate 46.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 27.79% |
| Values | Daily Returns |
General Motors vs. Mitsui Mining Smelting
Performance |
| Timeline |
| General Motors |
| Mitsui Mining Smelting |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Mitsui Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Mitsui Mining
The main advantage of trading using opposite GM and Mitsui Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Mitsui Mining 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 Mitsui Mining will offset losses from the drop in Mitsui Mining's long position.The idea behind General Motors and Mitsui Mining Smelting pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Mitsui Mining vs. Halma PLC | Mitsui Mining vs. Sekisui Chemical Co | Mitsui Mining vs. Grupo Carso SAB | Mitsui Mining vs. Sumitomo |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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