Correlation Between Lendlease and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both Lendlease and Mitsui Chemicals 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 Lendlease and Mitsui Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Mitsui Chemicals, you can compare the effects of market volatilities on Lendlease and Mitsui Chemicals 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 Lendlease with a short position of Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Mitsui Chemicals.
Diversification Opportunities for Lendlease and Mitsui Chemicals
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lendlease and Mitsui is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals and Lendlease 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 Lendlease Group are associated (or correlated) with Mitsui Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Chemicals has no effect on the direction of Lendlease i.e., Lendlease and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between Lendlease and Mitsui Chemicals
Assuming the 90 days trading horizon Lendlease Group is expected to generate 0.64 times more return on investment than Mitsui Chemicals. However, Lendlease Group is 1.57 times less risky than Mitsui Chemicals. It trades about 0.21 of its potential returns per unit of risk. Mitsui Chemicals is currently generating about 0.07 per unit of risk. If you would invest 405.00 in Lendlease Group on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Lendlease Group or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. Mitsui Chemicals
Performance |
| Timeline |
| Lendlease Group |
| Mitsui Chemicals |
Lendlease and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Mitsui Chemicals
The main advantage of trading using opposite Lendlease and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, Mitsui Chemicals 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 Mitsui Chemicals will offset losses from the drop in Mitsui Chemicals' long position.The idea behind Lendlease Group and Mitsui Chemicals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Mitsui Chemicals vs. SIVERS SEMICONDUCTORS AB | Mitsui Chemicals vs. Darden Restaurants | Mitsui Chemicals vs. Reliance Steel Aluminum | Mitsui Chemicals vs. Q2M Managementberatung AG |
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.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |