Correlation Between Huntsman and Mitsubishi Chemical
Can any of the company-specific risk be diversified away by investing in both Huntsman 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 Huntsman and Mitsubishi Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntsman and Mitsubishi Chemical Holdings, you can compare the effects of market volatilities on Huntsman 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 Huntsman with a short position of Mitsubishi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntsman and Mitsubishi Chemical.
Diversification Opportunities for Huntsman and Mitsubishi Chemical
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Huntsman and Mitsubishi is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman and Mitsubishi Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Chemical and Huntsman 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 Huntsman 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 Huntsman i.e., Huntsman and Mitsubishi Chemical go up and down completely randomly.
Pair Corralation between Huntsman and Mitsubishi Chemical
Considering the 90-day investment horizon Huntsman is expected to under-perform the Mitsubishi Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Huntsman is 1.24 times less risky than Mitsubishi Chemical. The stock trades about -0.05 of its potential returns per unit of risk. The Mitsubishi Chemical Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,674 in Mitsubishi Chemical Holdings on August 27, 2024 and sell it today you would lose (82.00) from holding Mitsubishi Chemical Holdings or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntsman vs. Mitsubishi Chemical Holdings
Performance |
| Timeline |
| Huntsman |
| Mitsubishi Chemical |
Huntsman and Mitsubishi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntsman and Mitsubishi Chemical
The main advantage of trading using opposite Huntsman and Mitsubishi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntsman 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.| Huntsman vs. Valhi Inc | Huntsman vs. Lsb Industries | Huntsman vs. Westlake Chemical Partners | Huntsman vs. Braskem SA Class |
| Mitsubishi Chemical vs. Origin Materials | Mitsubishi Chemical vs. BASF SE NA | Mitsubishi Chemical vs. Braskem SA Class | Mitsubishi Chemical vs. Lsb Industries |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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