Correlation Between Caltagirone SpA and MITSUBISHI STEEL

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Can any of the company-specific risk be diversified away by investing in both Caltagirone SpA and MITSUBISHI STEEL 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 Caltagirone SpA and MITSUBISHI STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caltagirone SpA and MITSUBISHI STEEL MFG, you can compare the effects of market volatilities on Caltagirone SpA and MITSUBISHI STEEL 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 Caltagirone SpA with a short position of MITSUBISHI STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caltagirone SpA and MITSUBISHI STEEL.

Diversification Opportunities for Caltagirone SpA and MITSUBISHI STEEL

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Caltagirone and MITSUBISHI is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Caltagirone SpA and MITSUBISHI STEEL MFG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITSUBISHI STEEL MFG and Caltagirone SpA 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 Caltagirone SpA are associated (or correlated) with MITSUBISHI STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITSUBISHI STEEL MFG has no effect on the direction of Caltagirone SpA i.e., Caltagirone SpA and MITSUBISHI STEEL go up and down completely randomly.

Pair Corralation between Caltagirone SpA and MITSUBISHI STEEL

Assuming the 90 days trading horizon Caltagirone SpA is expected to generate 0.95 times more return on investment than MITSUBISHI STEEL. However, Caltagirone SpA is 1.06 times less risky than MITSUBISHI STEEL. It trades about 0.09 of its potential returns per unit of risk. MITSUBISHI STEEL MFG is currently generating about 0.03 per unit of risk. If you would invest  272.00  in Caltagirone SpA on September 12, 2024 and sell it today you would earn a total of  338.00  from holding Caltagirone SpA or generate 124.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Caltagirone SpA  vs.  MITSUBISHI STEEL MFG

 Performance 
       Timeline  
Caltagirone SpA 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Caltagirone SpA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caltagirone SpA unveiled solid returns over the last few months and may actually be approaching a breakup point.
MITSUBISHI STEEL MFG 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in MITSUBISHI STEEL MFG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MITSUBISHI STEEL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Caltagirone SpA and MITSUBISHI STEEL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Caltagirone SpA and MITSUBISHI STEEL

The main advantage of trading using opposite Caltagirone SpA and MITSUBISHI STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caltagirone SpA position performs unexpectedly, MITSUBISHI STEEL 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 MITSUBISHI STEEL will offset losses from the drop in MITSUBISHI STEEL's long position.
The idea behind Caltagirone SpA and MITSUBISHI STEEL MFG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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