Correlation Between Mitsui Chemicals and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and Hon Hai 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 Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Hon Hai Precision, you can compare the effects of market volatilities on Mitsui Chemicals and Hon Hai 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 Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Hon Hai.
Diversification Opportunities for Mitsui Chemicals and Hon Hai
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mitsui and Hon is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Hon Hai Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hon Hai Precision 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 Hon Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hon Hai Precision has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Hon Hai go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Hon Hai
Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the Hon Hai. But the stock apears to be less risky and, when comparing its historical volatility, Mitsui Chemicals is 1.15 times less risky than Hon Hai. The stock trades about -0.2 of its potential returns per unit of risk. The Hon Hai Precision is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,120 in Hon Hai Precision on October 11, 2024 and sell it today you would lose (20.00) from holding Hon Hai Precision or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsui Chemicals vs. Hon Hai Precision
Performance |
| Timeline |
| Mitsui Chemicals |
| Hon Hai Precision |
Mitsui Chemicals and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Hon Hai
The main advantage of trading using opposite Mitsui Chemicals and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, Hon Hai 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 Hon Hai will offset losses from the drop in Hon Hai's long position.| Mitsui Chemicals vs. RCS MediaGroup SpA | Mitsui Chemicals vs. PKSHA TECHNOLOGY INC | Mitsui Chemicals vs. Take Two Interactive Software | Mitsui Chemicals vs. Flutter Entertainment PLC |
| Hon Hai vs. SYSTEMAIR AB | Hon Hai vs. Mitsui Chemicals | Hon Hai vs. MCEWEN MINING INC | Hon Hai vs. GRIFFIN MINING LTD |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |