Correlation Between Mitsui Chemicals and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and SMA Solar 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 SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and SMA Solar Technology, you can compare the effects of market volatilities on Mitsui Chemicals and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and SMA Solar.
Diversification Opportunities for Mitsui Chemicals and SMA Solar
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsui and SMA is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and SMA Solar go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and SMA Solar
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 11.01 times less return on investment than SMA Solar. But when comparing it to its historical volatility, Mitsui Chemicals is 3.13 times less risky than SMA Solar. It trades about 0.04 of its potential returns per unit of risk. SMA Solar Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,483 in SMA Solar Technology on November 22, 2024 and sell it today you would earn a total of 171.00 from holding SMA Solar Technology or generate 11.53% 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. SMA Solar Technology
Performance |
| Timeline |
| Mitsui Chemicals |
| SMA Solar Technology |
Mitsui Chemicals and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and SMA Solar
The main advantage of trading using opposite Mitsui Chemicals and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Mitsui Chemicals vs. FONIX MOBILE PLC | Mitsui Chemicals vs. FANDIFI TECHNOLOGY P | Mitsui Chemicals vs. Infrastrutture Wireless Italiane | Mitsui Chemicals vs. Sunny Optical Technology |
| SMA Solar vs. Direct Line Insurance | SMA Solar vs. Jacquet Metal Service | SMA Solar vs. VIENNA INSURANCE GR | SMA Solar vs. Zurich Insurance Group |
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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