Correlation Between Mitsui Chemicals and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals and Sunstone Hotel 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 Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Sunstone Hotel Investors, you can compare the effects of market volatilities on Mitsui Chemicals and Sunstone Hotel 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 Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Sunstone Hotel.
Diversification Opportunities for Mitsui Chemicals and Sunstone Hotel
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitsui and Sunstone is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Sunstone Hotel Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunstone Hotel Investors 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 Sunstone Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunstone Hotel Investors has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Sunstone Hotel
Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 2.26 times less return on investment than Sunstone Hotel. In addition to that, Mitsui Chemicals is 1.08 times more volatile than Sunstone Hotel Investors. It trades about 0.07 of its total potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.16 per unit of volatility. If you would invest 950.00 in Sunstone Hotel Investors on August 29, 2024 and sell it today you would earn a total of 70.00 from holding Sunstone Hotel Investors or generate 7.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsui Chemicals vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Mitsui Chemicals |
| Sunstone Hotel Investors |
Mitsui Chemicals and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Sunstone Hotel
The main advantage of trading using opposite Mitsui Chemicals and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals position performs unexpectedly, Sunstone Hotel 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 Sunstone Hotel will offset losses from the drop in Sunstone Hotel's long position.| Mitsui Chemicals vs. Apple Inc | Mitsui Chemicals vs. Apple Inc | Mitsui Chemicals vs. Microsoft | Mitsui Chemicals vs. Microsoft |
| Sunstone Hotel vs. ADRIATIC METALS LS 013355 | Sunstone Hotel vs. GALENA MINING LTD | Sunstone Hotel vs. Ross Stores | Sunstone Hotel vs. Perseus Mining Limited |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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