Correlation Between Mitsui Chemicals and Aozora Bank
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and Aozora Bank 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 Aozora Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Aozora Bank, you can compare the effects of market volatilities on Mitsui Chemicals and Aozora Bank 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 Aozora Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Aozora Bank.
Diversification Opportunities for Mitsui Chemicals and Aozora Bank
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mitsui and Aozora is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Aozora Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aozora Bank 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 Aozora Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aozora Bank has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Aozora Bank go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Aozora Bank
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 1.31 times more return on investment than Aozora Bank. However, Mitsui Chemicals is 1.31 times more volatile than Aozora Bank. It trades about 0.07 of its potential returns per unit of risk. Aozora Bank is currently generating about -0.2 per unit of risk. If you would invest 2,060 in Mitsui Chemicals on September 14, 2024 and sell it today you would earn a total of 60.00 from holding Mitsui Chemicals or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsui Chemicals vs. Aozora Bank
Performance |
| Timeline |
| Mitsui Chemicals |
| Aozora Bank |
Mitsui Chemicals and Aozora Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Aozora Bank
The main advantage of trading using opposite Mitsui Chemicals and Aozora Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, Aozora Bank 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 Aozora Bank will offset losses from the drop in Aozora Bank's long position.| Mitsui Chemicals vs. ScanSource | Mitsui Chemicals vs. Clearside Biomedical | Mitsui Chemicals vs. AVITA Medical | Mitsui Chemicals vs. CompuGroup Medical SE |
| Aozora Bank vs. Mitsui Chemicals | Aozora Bank vs. FLOW TRADERS LTD | Aozora Bank vs. MCEWEN MINING INC | Aozora Bank vs. MARKET VECTR RETAIL |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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