Correlation Between Hongkong Land and Mitsubishi Estate
Can any of the company-specific risk be diversified away by investing in both Hongkong Land and Mitsubishi Estate 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 Hongkong Land and Mitsubishi Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hongkong Land Holdings and Mitsubishi Estate Co, you can compare the effects of market volatilities on Hongkong Land and Mitsubishi Estate 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 Hongkong Land with a short position of Mitsubishi Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hongkong Land and Mitsubishi Estate.
Diversification Opportunities for Hongkong Land and Mitsubishi Estate
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hongkong and Mitsubishi is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hongkong Land Holdings and Mitsubishi Estate Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Estate and Hongkong Land 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 Hongkong Land Holdings are associated (or correlated) with Mitsubishi Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Estate has no effect on the direction of Hongkong Land i.e., Hongkong Land and Mitsubishi Estate go up and down completely randomly.
Pair Corralation between Hongkong Land and Mitsubishi Estate
Assuming the 90 days horizon Hongkong Land is expected to generate 1.72 times less return on investment than Mitsubishi Estate. In addition to that, Hongkong Land is 1.11 times more volatile than Mitsubishi Estate Co. It trades about 0.02 of its total potential returns per unit of risk. Mitsubishi Estate Co is currently generating about 0.03 per unit of volatility. If you would invest 1,140 in Mitsubishi Estate Co on November 2, 2024 and sell it today you would earn a total of 250.00 from holding Mitsubishi Estate Co or generate 21.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hongkong Land Holdings vs. Mitsubishi Estate Co
Performance |
| Timeline |
| Hongkong Land Holdings |
| Mitsubishi Estate |
Hongkong Land and Mitsubishi Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hongkong Land and Mitsubishi Estate
The main advantage of trading using opposite Hongkong Land and Mitsubishi Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hongkong Land position performs unexpectedly, Mitsubishi Estate 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 Estate will offset losses from the drop in Mitsubishi Estate's long position.| Hongkong Land vs. NEWELL RUBBERMAID | Hongkong Land vs. DISTRICT METALS | Hongkong Land vs. VULCAN MATERIALS | Hongkong Land vs. MAGNUM MINING EXP |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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