Correlation Between Mitsubishi Materials and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Materials and LG Electronics 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 LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Materials and LG Electronics, you can compare the effects of market volatilities on Mitsubishi Materials and LG Electronics 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 LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Materials and LG Electronics.
Diversification Opportunities for Mitsubishi Materials and LG Electronics
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mitsubishi and LGLG is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Materials and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of Mitsubishi Materials i.e., Mitsubishi Materials and LG Electronics go up and down completely randomly.
Pair Corralation between Mitsubishi Materials and LG Electronics
Assuming the 90 days trading horizon Mitsubishi Materials is expected to generate 0.71 times more return on investment than LG Electronics. However, Mitsubishi Materials is 1.41 times less risky than LG Electronics. It trades about 0.23 of its potential returns per unit of risk. LG Electronics is currently generating about -0.23 per unit of risk. If you would invest 1,390 in Mitsubishi Materials on October 22, 2024 and sell it today you would earn a total of 100.00 from holding Mitsubishi Materials or generate 7.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Materials vs. LG Electronics
Performance |
| Timeline |
| Mitsubishi Materials |
| LG Electronics |
Mitsubishi Materials and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Materials and LG Electronics
The main advantage of trading using opposite Mitsubishi Materials and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Materials position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| Mitsubishi Materials vs. PARKEN Sport Entertainment | Mitsubishi Materials vs. Fuji Media Holdings | Mitsubishi Materials vs. CLEAN ENERGY FUELS | Mitsubishi Materials vs. ANTA SPORTS PRODUCT |
| LG Electronics vs. PPHE HOTEL GROUP | LG Electronics vs. Park Hotels Resorts | LG Electronics vs. Playa Hotels Resorts | LG Electronics vs. Sunstone Hotel Investors |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |