Correlation Between Sunstone Hotel and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel 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 Sunstone Hotel and Mitsui Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunstone Hotel Investors and Mitsui Chemicals, you can compare the effects of market volatilities on Sunstone Hotel 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 Sunstone Hotel with a short position of Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Mitsui Chemicals.
Diversification Opportunities for Sunstone Hotel and Mitsui Chemicals
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sunstone and Mitsui is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals and Sunstone Hotel 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 Sunstone Hotel Investors 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 Sunstone Hotel i.e., Sunstone Hotel and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Mitsui Chemicals
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 0.94 times more return on investment than Mitsui Chemicals. However, Sunstone Hotel Investors is 1.07 times less risky than Mitsui Chemicals. It trades about 0.02 of its potential returns per unit of risk. Mitsui Chemicals is currently generating about 0.01 per unit of risk. If you would invest 923.00 in Sunstone Hotel Investors on September 3, 2024 and sell it today you would earn a total of 77.00 from holding Sunstone Hotel Investors or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Mitsui Chemicals
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Mitsui Chemicals |
Sunstone Hotel and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Mitsui Chemicals
The main advantage of trading using opposite Sunstone Hotel and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel 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.| Sunstone Hotel vs. Transport International Holdings | Sunstone Hotel vs. Transportadora de Gas | Sunstone Hotel vs. IMPERIAL TOBACCO | Sunstone Hotel vs. BII Railway Transportation |
| Mitsui Chemicals vs. DXC Technology Co | Mitsui Chemicals vs. Computer And Technologies | Mitsui Chemicals vs. SCOTT TECHNOLOGY | Mitsui Chemicals vs. Casio Computer CoLtd |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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