Correlation Between Sanyo Chemical and Mitsubishi Gas
Can any of the company-specific risk be diversified away by investing in both Sanyo Chemical and Mitsubishi Gas 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 Sanyo Chemical and Mitsubishi Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanyo Chemical Industries and Mitsubishi Gas Chemical, you can compare the effects of market volatilities on Sanyo Chemical and Mitsubishi Gas 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 Sanyo Chemical with a short position of Mitsubishi Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and Mitsubishi Gas.
Diversification Opportunities for Sanyo Chemical and Mitsubishi Gas
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sanyo and Mitsubishi is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and Mitsubishi Gas Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Gas Chemical and Sanyo 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 Sanyo Chemical Industries are associated (or correlated) with Mitsubishi Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Gas Chemical has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and Mitsubishi Gas go up and down completely randomly.
Pair Corralation between Sanyo Chemical and Mitsubishi Gas
Assuming the 90 days horizon Sanyo Chemical Industries is expected to under-perform the Mitsubishi Gas. But the stock apears to be less risky and, when comparing its historical volatility, Sanyo Chemical Industries is 1.29 times less risky than Mitsubishi Gas. The stock trades about -0.03 of its potential returns per unit of risk. The Mitsubishi Gas Chemical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,380 in Mitsubishi Gas Chemical on November 28, 2024 and sell it today you would earn a total of 100.00 from holding Mitsubishi Gas Chemical or generate 7.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanyo Chemical Industries vs. Mitsubishi Gas Chemical
Performance |
| Timeline |
| Sanyo Chemical Industries |
| Mitsubishi Gas Chemical |
Sanyo Chemical and Mitsubishi Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Chemical and Mitsubishi Gas
The main advantage of trading using opposite Sanyo Chemical and Mitsubishi Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Chemical position performs unexpectedly, Mitsubishi Gas 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 Gas will offset losses from the drop in Mitsubishi Gas' long position.| Sanyo Chemical vs. DEVRY EDUCATION GRP | Sanyo Chemical vs. HK Electric Investments | Sanyo Chemical vs. PennyMac Mortgage Investment | Sanyo Chemical vs. Adtalem Global Education |
| Mitsubishi Gas vs. Major Drilling Group | Mitsubishi Gas vs. ADRIATIC METALS LS 013355 | Mitsubishi Gas vs. AEON METALS LTD | Mitsubishi Gas vs. LI METAL P |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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