Correlation Between Mitsubishi Materials and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Materials and Compagnie Plastic 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 Materials and Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Materials and Compagnie Plastic Omnium, you can compare the effects of market volatilities on Mitsubishi Materials and Compagnie Plastic 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 Materials with a short position of Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Materials and Compagnie Plastic.
Diversification Opportunities for Mitsubishi Materials and Compagnie Plastic
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsubishi and Compagnie is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Materials and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium and Mitsubishi Materials 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 Materials are associated (or correlated) with Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Mitsubishi Materials i.e., Mitsubishi Materials and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Mitsubishi Materials and Compagnie Plastic
Assuming the 90 days trading horizon Mitsubishi Materials is expected to generate 0.75 times more return on investment than Compagnie Plastic. However, Mitsubishi Materials is 1.34 times less risky than Compagnie Plastic. It trades about 0.01 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.03 per unit of risk. If you would invest 1,500 in Mitsubishi Materials on August 29, 2024 and sell it today you would lose (10.00) from holding Mitsubishi Materials or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Materials vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| Mitsubishi Materials |
| Compagnie Plastic Omnium |
Mitsubishi Materials and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Materials and Compagnie Plastic
The main advantage of trading using opposite Mitsubishi Materials and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Materials position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.| Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Superior Plus Corp | Mitsubishi Materials vs. SIVERS SEMICONDUCTORS AB |
| Compagnie Plastic vs. PT Astra International | Compagnie Plastic vs. Continental Aktiengesellschaft | Compagnie Plastic vs. Superior Plus Corp | Compagnie Plastic vs. NMI Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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