Correlation Between Mitsui Chemicals and MKS Instruments
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and MKS Instruments 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 MKS Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and MKS Instruments, you can compare the effects of market volatilities on Mitsui Chemicals and MKS Instruments 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 MKS Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and MKS Instruments.
Diversification Opportunities for Mitsui Chemicals and MKS Instruments
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mitsui and MKS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and MKS Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKS Instruments 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 MKS Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKS Instruments has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and MKS Instruments go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and MKS Instruments
Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the MKS Instruments. But the stock apears to be less risky and, when comparing its historical volatility, Mitsui Chemicals is 1.25 times less risky than MKS Instruments. The stock trades about -0.03 of its potential returns per unit of risk. The MKS Instruments is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 10,000 in MKS Instruments on October 20, 2024 and sell it today you would earn a total of 1,365 from holding MKS Instruments or generate 13.65% 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. MKS Instruments
Performance |
| Timeline |
| Mitsui Chemicals |
| MKS Instruments |
Mitsui Chemicals and MKS Instruments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and MKS Instruments
The main advantage of trading using opposite Mitsui Chemicals and MKS Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, MKS Instruments 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 MKS Instruments will offset losses from the drop in MKS Instruments' long position.| Mitsui Chemicals vs. Merit Medical Systems | Mitsui Chemicals vs. Check Point Software | Mitsui Chemicals vs. CVR Medical Corp | Mitsui Chemicals vs. Constellation Software |
| MKS Instruments vs. Keyence | MKS Instruments vs. Keysight Technologies | MKS Instruments vs. Teledyne Technologies Incorporated | MKS Instruments vs. Trimble |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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