Correlation Between Mitsubishi Materials and Guangdong Investment
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Materials and Guangdong 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 Materials and Guangdong Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Materials and Guangdong Investment Limited, you can compare the effects of market volatilities on Mitsubishi Materials and Guangdong 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 Materials with a short position of Guangdong Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Materials and Guangdong Investment.
Diversification Opportunities for Mitsubishi Materials and Guangdong Investment
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitsubishi and Guangdong is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Materials and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment 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 Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of Mitsubishi Materials i.e., Mitsubishi Materials and Guangdong Investment go up and down completely randomly.
Pair Corralation between Mitsubishi Materials and Guangdong Investment
Assuming the 90 days trading horizon Mitsubishi Materials is expected to generate 0.27 times more return on investment than Guangdong Investment. However, Mitsubishi Materials is 3.69 times less risky than Guangdong Investment. It trades about 0.04 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about -0.13 per unit of risk. If you would invest 1,480 in Mitsubishi Materials on October 25, 2024 and sell it today you would earn a total of 10.00 from holding Mitsubishi Materials or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Materials vs. Guangdong Investment Limited
Performance |
| Timeline |
| Mitsubishi Materials |
| Guangdong Investment |
Mitsubishi Materials and Guangdong Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Materials and Guangdong Investment
The main advantage of trading using opposite Mitsubishi Materials and Guangdong Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Materials position performs unexpectedly, Guangdong 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 Guangdong Investment will offset losses from the drop in Guangdong Investment's long position.| Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc |
| Guangdong Investment vs. American Water Works | Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. Gelsenwasser AG | Guangdong Investment vs. American States Water |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |