Correlation Between Mitsui Chemicals and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and Aluminumof China 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 Aluminumof China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Aluminum of, you can compare the effects of market volatilities on Mitsui Chemicals and Aluminumof China 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 Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Aluminumof China.
Diversification Opportunities for Mitsui Chemicals and Aluminumof China
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsui and Aluminumof is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Aluminumof China go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Aluminumof China
Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the Aluminumof China. But the stock apears to be less risky and, when comparing its historical volatility, Mitsui Chemicals is 1.92 times less risky than Aluminumof China. The stock trades about -0.08 of its potential returns per unit of risk. The Aluminum of is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Aluminum of on September 3, 2024 and sell it today you would earn a total of 9.00 from holding Aluminum of or generate 19.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsui Chemicals vs. Aluminum of
Performance |
| Timeline |
| Mitsui Chemicals |
| Aluminumof China |
Mitsui Chemicals and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Aluminumof China
The main advantage of trading using opposite Mitsui Chemicals and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China'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 |
| Aluminumof China vs. TITANIUM TRANSPORTGROUP | Aluminumof China vs. TSOGO SUN GAMING | Aluminumof China vs. Media and Games | Aluminumof China vs. UNIVMUSIC GRPADR050 |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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