Correlation Between Mitsui Chemicals and NKT AS
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and NKT AS 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 NKT AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and NKT AS, you can compare the effects of market volatilities on Mitsui Chemicals and NKT AS 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 NKT AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and NKT AS.
Diversification Opportunities for Mitsui Chemicals and NKT AS
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mitsui and NKT is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and NKT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKT AS 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 NKT AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKT AS has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and NKT AS go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and NKT AS
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 0.75 times more return on investment than NKT AS. However, Mitsui Chemicals is 1.34 times less risky than NKT AS. It trades about -0.09 of its potential returns per unit of risk. NKT AS is currently generating about -0.11 per unit of risk. If you would invest 2,400 in Mitsui Chemicals on September 12, 2024 and sell it today you would lose (240.00) from holding Mitsui Chemicals or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsui Chemicals vs. NKT AS
Performance |
| Timeline |
| Mitsui Chemicals |
| NKT AS |
Mitsui Chemicals and NKT AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and NKT AS
The main advantage of trading using opposite Mitsui Chemicals and NKT AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, NKT AS 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 NKT AS will offset losses from the drop in NKT AS's long position.| Mitsui Chemicals vs. Apple Inc | Mitsui Chemicals vs. Apple Inc | Mitsui Chemicals vs. Apple Inc | Mitsui Chemicals vs. Apple Inc |
| NKT AS vs. Taiwan Semiconductor Manufacturing | NKT AS vs. Tower Semiconductor | NKT AS vs. Elmos Semiconductor SE | NKT AS vs. Meli Hotels International |
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 CEOs Directory module to screen CEOs from public companies around the world.
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