Correlation Between FIRST SHIP and Mitsubishi Materials
Can any of the company-specific risk be diversified away by investing in both FIRST SHIP 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 FIRST SHIP and Mitsubishi Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST SHIP LEASE and Mitsubishi Materials, you can compare the effects of market volatilities on FIRST SHIP 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 FIRST SHIP with a short position of Mitsubishi Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SHIP and Mitsubishi Materials.
Diversification Opportunities for FIRST SHIP and Mitsubishi Materials
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FIRST and Mitsubishi is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SHIP LEASE and Mitsubishi Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Materials and FIRST SHIP 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 FIRST SHIP LEASE 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 FIRST SHIP i.e., FIRST SHIP and Mitsubishi Materials go up and down completely randomly.
Pair Corralation between FIRST SHIP and Mitsubishi Materials
Assuming the 90 days horizon FIRST SHIP LEASE is expected to generate 5.99 times more return on investment than Mitsubishi Materials. However, FIRST SHIP is 5.99 times more volatile than Mitsubishi Materials. It trades about 0.01 of its potential returns per unit of risk. Mitsubishi Materials is currently generating about 0.06 per unit of risk. If you would invest 2.40 in FIRST SHIP LEASE on November 7, 2024 and sell it today you would lose (0.06) from holding FIRST SHIP LEASE or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIRST SHIP LEASE vs. Mitsubishi Materials
Performance |
| Timeline |
| FIRST SHIP LEASE |
| Mitsubishi Materials |
FIRST SHIP and Mitsubishi Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIRST SHIP and Mitsubishi Materials
The main advantage of trading using opposite FIRST SHIP and Mitsubishi Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SHIP 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.| FIRST SHIP vs. CODERE ONLINE LUX | FIRST SHIP vs. BOS BETTER ONLINE | FIRST SHIP vs. Salesforce | FIRST SHIP vs. Columbia Sportswear |
| Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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