Correlation Between HK Electric and Mitsubishi Materials
Can any of the company-specific risk be diversified away by investing in both HK Electric 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 HK Electric and Mitsubishi Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HK Electric Investments and Mitsubishi Materials, you can compare the effects of market volatilities on HK Electric 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 HK Electric with a short position of Mitsubishi Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Mitsubishi Materials.
Diversification Opportunities for HK Electric and Mitsubishi Materials
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HKT and Mitsubishi is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Mitsubishi Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Materials and HK Electric 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 HK Electric Investments 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 HK Electric i.e., HK Electric and Mitsubishi Materials go up and down completely randomly.
Pair Corralation between HK Electric and Mitsubishi Materials
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 0.51 times more return on investment than Mitsubishi Materials. However, HK Electric Investments is 1.96 times less risky than Mitsubishi Materials. It trades about 0.17 of its potential returns per unit of risk. Mitsubishi Materials is currently generating about -0.08 per unit of risk. If you would invest 63.00 in HK Electric Investments on October 10, 2024 and sell it today you would earn a total of 2.00 from holding HK Electric Investments or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Mitsubishi Materials
Performance |
| Timeline |
| HK Electric Investments |
| Mitsubishi Materials |
HK Electric and Mitsubishi Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Mitsubishi Materials
The main advantage of trading using opposite HK Electric and Mitsubishi Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric 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.| HK Electric vs. Ameriprise Financial | HK Electric vs. Broadwind | HK Electric vs. TITANIUM TRANSPORTGROUP | HK Electric vs. Direct Line Insurance |
| Mitsubishi Materials vs. WT OFFSHORE | Mitsubishi Materials vs. Sunny Optical Technology | Mitsubishi Materials vs. THORNEY TECHS LTD | Mitsubishi Materials vs. ORMAT TECHNOLOGIES |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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