Correlation Between Mitsubishi Materials and Smurfit Kappa
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Materials and Smurfit Kappa 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 Smurfit Kappa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Materials and Smurfit Kappa Group, you can compare the effects of market volatilities on Mitsubishi Materials and Smurfit Kappa 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 Smurfit Kappa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Materials and Smurfit Kappa.
Diversification Opportunities for Mitsubishi Materials and Smurfit Kappa
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mitsubishi and Smurfit is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Materials and Smurfit Kappa Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit Kappa Group 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 Smurfit Kappa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit Kappa Group has no effect on the direction of Mitsubishi Materials i.e., Mitsubishi Materials and Smurfit Kappa go up and down completely randomly.
Pair Corralation between Mitsubishi Materials and Smurfit Kappa
Assuming the 90 days trading horizon Mitsubishi Materials is expected to generate 10.62 times less return on investment than Smurfit Kappa. But when comparing it to its historical volatility, Mitsubishi Materials is 1.25 times less risky than Smurfit Kappa. It trades about 0.01 of its potential returns per unit of risk. Smurfit Kappa Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,116 in Smurfit Kappa Group on November 28, 2024 and sell it today you would earn a total of 1,994 from holding Smurfit Kappa Group or generate 63.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Materials vs. Smurfit Kappa Group
Performance |
| Timeline |
| Mitsubishi Materials |
| Smurfit Kappa Group |
Mitsubishi Materials and Smurfit Kappa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Materials and Smurfit Kappa
The main advantage of trading using opposite Mitsubishi Materials and Smurfit Kappa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Materials position performs unexpectedly, Smurfit Kappa 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 Smurfit Kappa will offset losses from the drop in Smurfit Kappa's long position.| Mitsubishi Materials vs. Globex Mining Enterprises | Mitsubishi Materials vs. Datalogic SpA | Mitsubishi Materials vs. RESMINING UNSPADR10 | Mitsubishi Materials vs. Stewart Information Services |
| Smurfit Kappa vs. Bumrungrad Hospital PCL | Smurfit Kappa vs. CompuGroup Medical SE | Smurfit Kappa vs. Japan Medical Dynamic | Smurfit Kappa vs. CLOVER HEALTH INV |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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