Correlation Between Mitsui Chemicals and Mercedes Benz
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and Mercedes Benz 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 Mercedes Benz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Mercedes Benz Group AG, you can compare the effects of market volatilities on Mitsui Chemicals and Mercedes Benz 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 Mercedes Benz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Mercedes Benz.
Diversification Opportunities for Mitsui Chemicals and Mercedes Benz
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mitsui and Mercedes is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Mercedes Benz Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercedes Benz Group 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 Mercedes Benz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercedes Benz Group has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Mercedes Benz go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Mercedes Benz
Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the Mercedes Benz. But the stock apears to be less risky and, when comparing its historical volatility, Mitsui Chemicals is 1.16 times less risky than Mercedes Benz. The stock trades about -0.09 of its potential returns per unit of risk. The Mercedes Benz Group AG is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 5,333 in Mercedes Benz Group AG on October 25, 2024 and sell it today you would earn a total of 287.00 from holding Mercedes Benz Group AG or generate 5.38% 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. Mercedes Benz Group AG
Performance |
| Timeline |
| Mitsui Chemicals |
| Mercedes Benz Group |
Mitsui Chemicals and Mercedes Benz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Mercedes Benz
The main advantage of trading using opposite Mitsui Chemicals and Mercedes Benz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, Mercedes Benz 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 Mercedes Benz will offset losses from the drop in Mercedes Benz's long position.| Mitsui Chemicals vs. Casio Computer CoLtd | Mitsui Chemicals vs. LANDSEA GREEN MANAGEMENT | Mitsui Chemicals vs. X FAB Silicon Foundries | Mitsui Chemicals vs. Check Point Software |
| Mercedes Benz vs. BURLINGTON STORES | Mercedes Benz vs. Wyndham Hotels Resorts | Mercedes Benz vs. HYATT HOTELS A | Mercedes Benz vs. Mitsui Chemicals |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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