Correlation Between Mitsui Chemicals and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and MELIA HOTELS 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 MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and MELIA HOTELS, you can compare the effects of market volatilities on Mitsui Chemicals and MELIA HOTELS 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 MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and MELIA HOTELS.
Diversification Opportunities for Mitsui Chemicals and MELIA HOTELS
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsui and MELIA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS 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 MELIA HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MELIA HOTELS has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and MELIA HOTELS
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 0.71 times more return on investment than MELIA HOTELS. However, Mitsui Chemicals is 1.41 times less risky than MELIA HOTELS. It trades about -0.09 of its potential returns per unit of risk. MELIA HOTELS is currently generating about -0.17 per unit of risk. If you would invest 2,100 in Mitsui Chemicals on October 25, 2024 and sell it today you would lose (40.00) from holding Mitsui Chemicals or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsui Chemicals vs. MELIA HOTELS
Performance |
| Timeline |
| Mitsui Chemicals |
| MELIA HOTELS |
Mitsui Chemicals and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and MELIA HOTELS
The main advantage of trading using opposite Mitsui Chemicals and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, MELIA HOTELS 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 MELIA HOTELS will offset losses from the drop in MELIA HOTELS'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 |
| MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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