Correlation Between TOTAL GABON and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both TOTAL GABON and Mitsui Chemicals 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 TOTAL GABON and Mitsui Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOTAL GABON and Mitsui Chemicals, you can compare the effects of market volatilities on TOTAL GABON and Mitsui Chemicals 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 TOTAL GABON with a short position of Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and Mitsui Chemicals.
Diversification Opportunities for TOTAL GABON and Mitsui Chemicals
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between TOTAL and Mitsui is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals and TOTAL GABON 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 TOTAL GABON are associated (or correlated) with Mitsui Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Chemicals has no effect on the direction of TOTAL GABON i.e., TOTAL GABON and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between TOTAL GABON and Mitsui Chemicals
Assuming the 90 days trading horizon TOTAL GABON is expected to generate 0.92 times more return on investment than Mitsui Chemicals. However, TOTAL GABON is 1.08 times less risky than Mitsui Chemicals. It trades about 0.06 of its potential returns per unit of risk. Mitsui Chemicals is currently generating about 0.01 per unit of risk. If you would invest 12,156 in TOTAL GABON on September 12, 2024 and sell it today you would earn a total of 6,544 from holding TOTAL GABON or generate 53.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOTAL GABON vs. Mitsui Chemicals
Performance |
| Timeline |
| TOTAL GABON |
| Mitsui Chemicals |
TOTAL GABON and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOTAL GABON and Mitsui Chemicals
The main advantage of trading using opposite TOTAL GABON and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON position performs unexpectedly, Mitsui Chemicals 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 Mitsui Chemicals will offset losses from the drop in Mitsui Chemicals' long position.| TOTAL GABON vs. TYSON FOODS A | TOTAL GABON vs. National Beverage Corp | TOTAL GABON vs. Food Life Companies | TOTAL GABON vs. SENECA FOODS A |
| Mitsui Chemicals vs. Apple Inc | Mitsui Chemicals vs. Apple Inc | Mitsui Chemicals vs. Apple Inc | Mitsui Chemicals vs. Apple Inc |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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