Correlation Between Mitsui Chemicals and Hafnia
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and Hafnia 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 Mitsui Chemicals and Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Hafnia Limited, you can compare the effects of market volatilities on Mitsui Chemicals and Hafnia 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 Mitsui Chemicals with a short position of Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Hafnia.
Diversification Opportunities for Mitsui Chemicals and Hafnia
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mitsui and Hafnia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and Mitsui Chemicals 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 Mitsui Chemicals are associated (or correlated) with Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Hafnia go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Hafnia
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 7.4 times less return on investment than Hafnia. But when comparing it to its historical volatility, Mitsui Chemicals is 2.65 times less risky than Hafnia. It trades about 0.05 of its potential returns per unit of risk. Hafnia Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 488.00 in Hafnia Limited on September 3, 2024 and sell it today you would earn a total of 70.00 from holding Hafnia Limited or generate 14.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Mitsui Chemicals vs. Hafnia Limited
Performance |
| Timeline |
| Mitsui Chemicals |
| Hafnia Limited |
Mitsui Chemicals and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Hafnia
The main advantage of trading using opposite Mitsui Chemicals and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, Hafnia 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 Hafnia will offset losses from the drop in Hafnia's long position.| Mitsui Chemicals vs. DXC Technology Co | Mitsui Chemicals vs. Computer And Technologies | Mitsui Chemicals vs. SCOTT TECHNOLOGY | Mitsui Chemicals vs. Casio Computer CoLtd |
| Hafnia vs. Reliance Steel Aluminum | Hafnia vs. TYSON FOODS A | Hafnia vs. Mitsui Chemicals | Hafnia vs. United States Steel |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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