Correlation Between Mitsubishi Electric and CHINA FORTUNE
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Electric and CHINA FORTUNE 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 Mitsubishi Electric and CHINA FORTUNE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Electric and CHINA FORTUNE HLDGHD001, you can compare the effects of market volatilities on Mitsubishi Electric and CHINA FORTUNE 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 Mitsubishi Electric with a short position of CHINA FORTUNE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Electric and CHINA FORTUNE.
Diversification Opportunities for Mitsubishi Electric and CHINA FORTUNE
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitsubishi and CHINA is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Electric and CHINA FORTUNE HLDGHD001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA FORTUNE HLDGHD001 and Mitsubishi 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 Mitsubishi Electric are associated (or correlated) with CHINA FORTUNE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA FORTUNE HLDGHD001 has no effect on the direction of Mitsubishi Electric i.e., Mitsubishi Electric and CHINA FORTUNE go up and down completely randomly.
Pair Corralation between Mitsubishi Electric and CHINA FORTUNE
Assuming the 90 days trading horizon Mitsubishi Electric is expected to generate 0.41 times more return on investment than CHINA FORTUNE. However, Mitsubishi Electric is 2.44 times less risky than CHINA FORTUNE. It trades about 0.19 of its potential returns per unit of risk. CHINA FORTUNE HLDGHD001 is currently generating about -0.05 per unit of risk. If you would invest 1,412 in Mitsubishi Electric on August 30, 2024 and sell it today you would earn a total of 157.00 from holding Mitsubishi Electric or generate 11.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Mitsubishi Electric vs. CHINA FORTUNE HLDGHD001
Performance |
| Timeline |
| Mitsubishi Electric |
| CHINA FORTUNE HLDGHD001 |
Mitsubishi Electric and CHINA FORTUNE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Electric and CHINA FORTUNE
The main advantage of trading using opposite Mitsubishi Electric and CHINA FORTUNE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Electric position performs unexpectedly, CHINA FORTUNE 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 CHINA FORTUNE will offset losses from the drop in CHINA FORTUNE's long position.| Mitsubishi Electric vs. Virtus Investment Partners | Mitsubishi Electric vs. Major Drilling Group | Mitsubishi Electric vs. MYFAIR GOLD P | Mitsubishi Electric vs. Genco Shipping Trading |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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