Correlation Between Mitsui Chemicals and Amazon
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and Amazon 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 Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Amazon Inc, you can compare the effects of market volatilities on Mitsui Chemicals and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Amazon.
Diversification Opportunities for Mitsui Chemicals and Amazon
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsui and Amazon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Amazon go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Amazon
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 4.51 times less return on investment than Amazon. But when comparing it to its historical volatility, Mitsui Chemicals is 1.28 times less risky than Amazon. It trades about 0.04 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 21,950 in Amazon Inc on November 7, 2024 and sell it today you would earn a total of 1,065 from holding Amazon Inc or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsui Chemicals vs. Amazon Inc
Performance |
| Timeline |
| Mitsui Chemicals |
| Amazon Inc |
Mitsui Chemicals and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Amazon
The main advantage of trading using opposite Mitsui Chemicals and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| Mitsui Chemicals vs. Arrow Electronics | Mitsui Chemicals vs. Nordic Semiconductor ASA | Mitsui Chemicals vs. AOI Electronics Co | Mitsui Chemicals vs. Renesas Electronics |
| Amazon vs. Heidelberg Materials AG | Amazon vs. Tower One Wireless | Amazon vs. BRIT AMER TOBACCO | Amazon vs. 24SEVENOFFICE GROUP 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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