Correlation Between Mitsubishi Electric and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Electric and Samsung SDI 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 Samsung SDI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Electric and Samsung SDI Co, you can compare the effects of market volatilities on Mitsubishi Electric and Samsung SDI 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 Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Electric and Samsung SDI.
Diversification Opportunities for Mitsubishi Electric and Samsung SDI
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitsubishi and Samsung is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Electric and Samsung SDI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI 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 Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of Mitsubishi Electric i.e., Mitsubishi Electric and Samsung SDI go up and down completely randomly.
Pair Corralation between Mitsubishi Electric and Samsung SDI
Assuming the 90 days trading horizon Mitsubishi Electric is expected to generate 0.85 times more return on investment than Samsung SDI. However, Mitsubishi Electric is 1.17 times less risky than Samsung SDI. It trades about 0.04 of its potential returns per unit of risk. Samsung SDI Co is currently generating about -0.06 per unit of risk. If you would invest 1,158 in Mitsubishi Electric on August 29, 2024 and sell it today you would earn a total of 405.00 from holding Mitsubishi Electric or generate 34.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Electric vs. Samsung SDI Co
Performance |
| Timeline |
| Mitsubishi Electric |
| Samsung SDI |
Mitsubishi Electric and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Electric and Samsung SDI
The main advantage of trading using opposite Mitsubishi Electric and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Electric position performs unexpectedly, Samsung SDI 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 Samsung SDI will offset losses from the drop in Samsung SDI's long position.| Mitsubishi Electric vs. MCEWEN MINING INC | Mitsubishi Electric vs. Perseus Mining Limited | Mitsubishi Electric vs. CONAGRA FOODS | Mitsubishi Electric vs. National Beverage Corp |
| Samsung SDI vs. FORWARD AIR P | Samsung SDI vs. WIZZ AIR HLDGUNSPADR4 | Samsung SDI vs. Ubisoft Entertainment SA | Samsung SDI vs. SYSTEMAIR AB |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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