Correlation Between Mitsubishi Gas and SLR Investment

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Can any of the company-specific risk be diversified away by investing in both Mitsubishi Gas and SLR Investment 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 SLR Investment 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 SLR Investment Corp, you can compare the effects of market volatilities on Mitsubishi Gas and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Gas and SLR Investment.

Diversification Opportunities for Mitsubishi Gas and SLR Investment

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Mitsubishi and SLR is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Gas Chemical and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Mitsubishi Gas i.e., Mitsubishi Gas and SLR Investment go up and down completely randomly.

Pair Corralation between Mitsubishi Gas and SLR Investment

Assuming the 90 days trading horizon Mitsubishi Gas is expected to generate 2.99 times less return on investment than SLR Investment. In addition to that, Mitsubishi Gas is 1.77 times more volatile than SLR Investment Corp. It trades about 0.02 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.08 per unit of volatility. If you would invest  1,328  in SLR Investment Corp on September 24, 2024 and sell it today you would earn a total of  213.00  from holding SLR Investment Corp or generate 16.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Mitsubishi Gas Chemical  vs.  SLR Investment Corp

 Performance 
       Timeline  
Mitsubishi Gas Chemical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mitsubishi Gas Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mitsubishi Gas is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
SLR Investment Corp 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SLR Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi Gas and SLR Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mitsubishi Gas and SLR Investment

The main advantage of trading using opposite Mitsubishi Gas and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Gas position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.
The idea behind Mitsubishi Gas Chemical and SLR Investment Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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