Correlation Between Mitsui Chemicals and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and Berkshire Hathaway 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 Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Berkshire Hathaway, you can compare the effects of market volatilities on Mitsui Chemicals and Berkshire Hathaway 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 Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Berkshire Hathaway.
Diversification Opportunities for Mitsui Chemicals and Berkshire Hathaway
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mitsui and Berkshire is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Berkshire Hathaway
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 72.52 times less return on investment than Berkshire Hathaway. But when comparing it to its historical volatility, Mitsui Chemicals is 25.63 times less risky than Berkshire Hathaway. It trades about 0.02 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 43,400,000 in Berkshire Hathaway on August 30, 2024 and sell it today you would earn a total of 25,150,000 from holding Berkshire Hathaway or generate 57.95% 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. Berkshire Hathaway
Performance |
| Timeline |
| Mitsui Chemicals |
| Berkshire Hathaway |
Mitsui Chemicals and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Berkshire Hathaway
The main advantage of trading using opposite Mitsui Chemicals and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Mitsui Chemicals vs. Apple Inc | Mitsui Chemicals vs. Apple Inc | Mitsui Chemicals vs. Superior Plus Corp | Mitsui Chemicals vs. SIVERS SEMICONDUCTORS AB |
| Berkshire Hathaway vs. XLMedia PLC | Berkshire Hathaway vs. Nordic Semiconductor ASA | Berkshire Hathaway vs. REMEDY ENTERTAINMENT OYJ | Berkshire Hathaway vs. ZINC MEDIA GR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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