Correlation Between China BlueChemical and Mitsubishi Electric
Can any of the company-specific risk be diversified away by investing in both China BlueChemical and Mitsubishi Electric 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 BlueChemical and Mitsubishi Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and Mitsubishi Electric, you can compare the effects of market volatilities on China BlueChemical and Mitsubishi Electric 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 BlueChemical with a short position of Mitsubishi Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and Mitsubishi Electric.
Diversification Opportunities for China BlueChemical and Mitsubishi Electric
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Mitsubishi is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and Mitsubishi Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Electric and China BlueChemical 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 BlueChemical are associated (or correlated) with Mitsubishi Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Electric has no effect on the direction of China BlueChemical i.e., China BlueChemical and Mitsubishi Electric go up and down completely randomly.
Pair Corralation between China BlueChemical and Mitsubishi Electric
Assuming the 90 days horizon China BlueChemical is expected to generate 2.08 times more return on investment than Mitsubishi Electric. However, China BlueChemical is 2.08 times more volatile than Mitsubishi Electric. It trades about 0.07 of its potential returns per unit of risk. Mitsubishi Electric is currently generating about -0.03 per unit of risk. If you would invest 23.00 in China BlueChemical on September 12, 2024 and sell it today you would earn a total of 1.00 from holding China BlueChemical or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China BlueChemical vs. Mitsubishi Electric
Performance |
| Timeline |
| China BlueChemical |
| Mitsubishi Electric |
China BlueChemical and Mitsubishi Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and Mitsubishi Electric
The main advantage of trading using opposite China BlueChemical and Mitsubishi Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical position performs unexpectedly, Mitsubishi Electric 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 Electric will offset losses from the drop in Mitsubishi Electric's long position.| China BlueChemical vs. Superior Plus Corp | China BlueChemical vs. SIVERS SEMICONDUCTORS AB | China BlueChemical vs. NorAm Drilling AS | China BlueChemical vs. Norsk Hydro ASA |
| Mitsubishi Electric vs. Insteel Industries | Mitsubishi Electric vs. Daido Steel Co | Mitsubishi Electric vs. Cleanaway Waste Management | Mitsubishi Electric vs. SWISS WATER DECAFFCOFFEE |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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