Correlation Between Mitsui Chemicals and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and Cardinal Health 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 Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Cardinal Health, you can compare the effects of market volatilities on Mitsui Chemicals and Cardinal Health 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 Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Cardinal Health.
Diversification Opportunities for Mitsui Chemicals and Cardinal Health
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitsui and Cardinal is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Cardinal Health go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Cardinal Health
Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the Cardinal Health. In addition to that, Mitsui Chemicals is 1.28 times more volatile than Cardinal Health. It trades about -0.08 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.13 per unit of volatility. If you would invest 8,988 in Cardinal Health on August 31, 2024 and sell it today you would earn a total of 2,607 from holding Cardinal Health or generate 29.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
Mitsui Chemicals vs. Cardinal Health
Performance |
| Timeline |
| Mitsui Chemicals |
| Cardinal Health |
Mitsui Chemicals and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Cardinal Health
The main advantage of trading using opposite Mitsui Chemicals and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.| Mitsui Chemicals vs. SIVERS SEMICONDUCTORS AB | Mitsui Chemicals vs. Darden Restaurants | Mitsui Chemicals vs. Reliance Steel Aluminum | Mitsui Chemicals vs. Q2M Managementberatung AG |
| Cardinal Health vs. China Resources Beer | Cardinal Health vs. AIR PRODCHEMICALS | Cardinal Health vs. GOODYEAR T RUBBER | Cardinal Health vs. APPLIED MATERIALS |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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