Correlation Between Mitsui Chemicals and Tianjin Capital
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and Tianjin Capital 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 Tianjin Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Tianjin Capital Environmental, you can compare the effects of market volatilities on Mitsui Chemicals and Tianjin Capital 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 Tianjin Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Tianjin Capital.
Diversification Opportunities for Mitsui Chemicals and Tianjin Capital
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsui and Tianjin is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Tianjin Capital go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Tianjin Capital
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 1673.5 times less return on investment than Tianjin Capital. But when comparing it to its historical volatility, Mitsui Chemicals is 3.01 times less risky than Tianjin Capital. It trades about 0.0 of its potential returns per unit of risk. Tianjin Capital Environmental is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Tianjin Capital Environmental on November 9, 2024 and sell it today you would earn a total of 26.00 from holding Tianjin Capital Environmental or generate 216.67% 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. Tianjin Capital Environmental
Performance |
| Timeline |
| Mitsui Chemicals |
| Tianjin Capital Envi |
Mitsui Chemicals and Tianjin Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Tianjin Capital
The main advantage of trading using opposite Mitsui Chemicals and Tianjin Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, Tianjin Capital 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 Tianjin Capital will offset losses from the drop in Tianjin Capital's long position.| Mitsui Chemicals vs. ALTAIR RES INC | Mitsui Chemicals vs. CAREER EDUCATION | Mitsui Chemicals vs. Alaska Air Group | Mitsui Chemicals vs. NORWEGIAN AIR SHUT |
| Tianjin Capital vs. CHEMICAL INDUSTRIES | Tianjin Capital vs. Suntory Beverage Food | Tianjin Capital vs. China BlueChemical | Tianjin Capital vs. Tsingtao Brewery |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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