Correlation Between THRACE PLASTICS and Mitsubishi Materials
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS and Mitsubishi Materials 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 THRACE PLASTICS and Mitsubishi Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and Mitsubishi Materials, you can compare the effects of market volatilities on THRACE PLASTICS and Mitsubishi Materials 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 THRACE PLASTICS with a short position of Mitsubishi Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and Mitsubishi Materials.
Diversification Opportunities for THRACE PLASTICS and Mitsubishi Materials
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between THRACE and Mitsubishi is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and Mitsubishi Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Materials and THRACE PLASTICS 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 THRACE PLASTICS are associated (or correlated) with Mitsubishi Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Materials has no effect on the direction of THRACE PLASTICS i.e., THRACE PLASTICS and Mitsubishi Materials go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and Mitsubishi Materials
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 0.89 times more return on investment than Mitsubishi Materials. However, THRACE PLASTICS is 1.12 times less risky than Mitsubishi Materials. It trades about 0.02 of its potential returns per unit of risk. Mitsubishi Materials is currently generating about 0.01 per unit of risk. If you would invest 356.00 in THRACE PLASTICS on August 29, 2024 and sell it today you would earn a total of 33.00 from holding THRACE PLASTICS or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THRACE PLASTICS vs. Mitsubishi Materials
Performance |
| Timeline |
| THRACE PLASTICS |
| Mitsubishi Materials |
THRACE PLASTICS and Mitsubishi Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and Mitsubishi Materials
The main advantage of trading using opposite THRACE PLASTICS and Mitsubishi Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS position performs unexpectedly, Mitsubishi Materials 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 Materials will offset losses from the drop in Mitsubishi Materials' long position.| THRACE PLASTICS vs. FANDIFI TECHNOLOGY P | THRACE PLASTICS vs. Verizon Communications | THRACE PLASTICS vs. SBA Communications Corp | THRACE PLASTICS vs. SCOTT TECHNOLOGY |
| Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Superior Plus Corp | Mitsubishi Materials vs. SIVERS SEMICONDUCTORS AB |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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