Correlation Between Sumitomo Chemical and Mitsubishi Chemical
Can any of the company-specific risk be diversified away by investing in both Sumitomo Chemical and Mitsubishi Chemical 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 Sumitomo Chemical and Mitsubishi Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Chemical Co and Mitsubishi Chemical Holdings, you can compare the effects of market volatilities on Sumitomo Chemical and Mitsubishi Chemical 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 Sumitomo Chemical with a short position of Mitsubishi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Chemical and Mitsubishi Chemical.
Diversification Opportunities for Sumitomo Chemical and Mitsubishi Chemical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumitomo and Mitsubishi is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Chemical Co and Mitsubishi Chemical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Chemical and Sumitomo Chemical 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 Sumitomo Chemical Co are associated (or correlated) with Mitsubishi Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Chemical has no effect on the direction of Sumitomo Chemical i.e., Sumitomo Chemical and Mitsubishi Chemical go up and down completely randomly.
Pair Corralation between Sumitomo Chemical and Mitsubishi Chemical
Assuming the 90 days horizon Sumitomo Chemical Co is expected to under-perform the Mitsubishi Chemical. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sumitomo Chemical Co is 1.16 times less risky than Mitsubishi Chemical. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Mitsubishi Chemical Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,809 in Mitsubishi Chemical Holdings on August 31, 2024 and sell it today you would lose (83.00) from holding Mitsubishi Chemical Holdings or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Sumitomo Chemical Co vs. Mitsubishi Chemical Holdings
Performance |
| Timeline |
| Sumitomo Chemical |
| Mitsubishi Chemical |
Sumitomo Chemical and Mitsubishi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Chemical and Mitsubishi Chemical
The main advantage of trading using opposite Sumitomo Chemical and Mitsubishi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Chemical position performs unexpectedly, Mitsubishi Chemical 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 Chemical will offset losses from the drop in Mitsubishi Chemical's long position.| Sumitomo Chemical vs. Solvay SA | Sumitomo Chemical vs. Orbia Advance | Sumitomo Chemical vs. Braskem SA Class | Sumitomo Chemical vs. Dow Inc |
| Mitsubishi Chemical vs. Sumitomo Chemical Co | Mitsubishi Chemical vs. Asahi Kaisei Corp | Mitsubishi Chemical vs. Nitto Denko Corp | Mitsubishi Chemical vs. Shin Etsu Chemical Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |