Correlation Between Technos SA and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both Technos SA and Mitsubishi UFJ 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 Technos SA and Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technos SA and Mitsubishi UFJ Financial, you can compare the effects of market volatilities on Technos SA and Mitsubishi UFJ 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 Technos SA with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technos SA and Mitsubishi UFJ.
Diversification Opportunities for Technos SA and Mitsubishi UFJ
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Technos and Mitsubishi is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Technos SA and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial and Technos SA 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 Technos SA are associated (or correlated) with Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Financial has no effect on the direction of Technos SA i.e., Technos SA and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between Technos SA and Mitsubishi UFJ
Assuming the 90 days trading horizon Technos SA is expected to under-perform the Mitsubishi UFJ. In addition to that, Technos SA is 1.61 times more volatile than Mitsubishi UFJ Financial. It trades about -0.03 of its total potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.42 per unit of volatility. If you would invest 5,768 in Mitsubishi UFJ Financial on August 30, 2024 and sell it today you would earn a total of 1,120 from holding Mitsubishi UFJ Financial or generate 19.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Technos SA vs. Mitsubishi UFJ Financial
Performance |
| Timeline |
| Technos SA |
| Mitsubishi UFJ Financial |
Technos SA and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technos SA and Mitsubishi UFJ
The main advantage of trading using opposite Technos SA and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technos SA position performs unexpectedly, Mitsubishi UFJ 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 UFJ will offset losses from the drop in Mitsubishi UFJ's long position.The idea behind Technos SA and Mitsubishi UFJ Financial 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.| Mitsubishi UFJ vs. Banco Santander SA | Mitsubishi UFJ vs. Sumitomo Mitsui Financial | Mitsubishi UFJ vs. Banco do Estado |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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