Correlation Between Mitsubishi Gas and X FAB
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Gas and X FAB 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 Mitsubishi Gas and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Gas Chemical and X FAB Silicon Foundries, you can compare the effects of market volatilities on Mitsubishi Gas and X FAB 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 Mitsubishi Gas with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Gas and X FAB.
Diversification Opportunities for Mitsubishi Gas and X FAB
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mitsubishi and XFB is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Gas Chemical and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon and Mitsubishi Gas 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 Mitsubishi Gas Chemical are associated (or correlated) with X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Mitsubishi Gas i.e., Mitsubishi Gas and X FAB go up and down completely randomly.
Pair Corralation between Mitsubishi Gas and X FAB
Assuming the 90 days trading horizon Mitsubishi Gas Chemical is expected to generate 0.71 times more return on investment than X FAB. However, Mitsubishi Gas Chemical is 1.42 times less risky than X FAB. It trades about 0.04 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.02 per unit of risk. If you would invest 1,290 in Mitsubishi Gas Chemical on September 3, 2024 and sell it today you would earn a total of 460.00 from holding Mitsubishi Gas Chemical or generate 35.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Gas Chemical vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Mitsubishi Gas Chemical |
| X FAB Silicon |
Mitsubishi Gas and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Gas and X FAB
The main advantage of trading using opposite Mitsubishi Gas and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Gas position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Mitsubishi Gas vs. Apple Inc | Mitsubishi Gas vs. Apple Inc | Mitsubishi Gas vs. Apple Inc | Mitsubishi Gas vs. Apple Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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