Correlation Between Mitsubishi Materials and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Materials and Yanzhou Coal 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 Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Materials and Yanzhou Coal Mining, you can compare the effects of market volatilities on Mitsubishi Materials and Yanzhou Coal 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 Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Materials and Yanzhou Coal.
Diversification Opportunities for Mitsubishi Materials and Yanzhou Coal
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mitsubishi and Yanzhou is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Materials and Yanzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanzhou Coal Mining 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 Yanzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanzhou Coal Mining has no effect on the direction of Mitsubishi Materials i.e., Mitsubishi Materials and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Mitsubishi Materials and Yanzhou Coal
Assuming the 90 days trading horizon Mitsubishi Materials is expected to under-perform the Yanzhou Coal. But the stock apears to be less risky and, when comparing its historical volatility, Mitsubishi Materials is 2.11 times less risky than Yanzhou Coal. The stock trades about -0.03 of its potential returns per unit of risk. The Yanzhou Coal Mining is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,099 in Yanzhou Coal Mining on November 2, 2024 and sell it today you would lose (69.00) from holding Yanzhou Coal Mining or give up 6.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Materials vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Mitsubishi Materials |
| Yanzhou Coal Mining |
Mitsubishi Materials and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Materials and Yanzhou Coal
The main advantage of trading using opposite Mitsubishi Materials and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Materials position performs unexpectedly, Yanzhou Coal 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 Yanzhou Coal will offset losses from the drop in Yanzhou Coal's long position.| Mitsubishi Materials vs. KOBE STEEL LTD | Mitsubishi Materials vs. Khiron Life Sciences | Mitsubishi Materials vs. The Home Depot | Mitsubishi Materials vs. American Homes 4 |
| Yanzhou Coal vs. LG Display Co | Yanzhou Coal vs. Computershare Limited | Yanzhou Coal vs. DXC Technology Co | Yanzhou Coal vs. TRAVEL LEISURE DL 01 |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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