Correlation Between HF FOODS and Mitsubishi Estate

Can any of the company-specific risk be diversified away by investing in both HF FOODS and Mitsubishi Estate 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 HF FOODS and Mitsubishi Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HF FOODS GRP and Mitsubishi Estate Co, you can compare the effects of market volatilities on HF FOODS and Mitsubishi Estate 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 HF FOODS with a short position of Mitsubishi Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF FOODS and Mitsubishi Estate.

Diversification Opportunities for HF FOODS and Mitsubishi Estate

-0.66

Correlation Coefficient

HF FOODS  Mitsubishi Estate

Excellent diversification

The 3 months correlation between 3GX and Mitsubishi is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding HF FOODS GRP and Mitsubishi Estate Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Estate and HF FOODS 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 HF FOODS GRP are associated (or correlated) with Mitsubishi Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Estate has no effect on the direction of HF FOODS i.e., HF FOODS and Mitsubishi Estate go up and down completely randomly.

Pair Corralation between HF FOODS and Mitsubishi Estate

Assuming the 90 days horizon HF FOODS GRP is expected to under-perform the Mitsubishi Estate. In addition to that, HF FOODS is 1.7 times more volatile than Mitsubishi Estate Co. It trades about -0.38 of its total potential returns per unit of risk. Mitsubishi Estate Co is currently generating about 0.07 per unit of volatility. If you would invest  1,310  in Mitsubishi Estate Co on December 2, 2024 and sell it today you would earn a total of  80.00  from holding Mitsubishi Estate Co or generate 6.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

HF FOODS GRP  vs.  Mitsubishi Estate Co

HF FOODS GRP

Risk-Adjusted Performance

Very Weak

Over the last 90 days HF FOODS GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mitsubishi Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Estate Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mitsubishi Estate may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HF FOODS and Mitsubishi Estate

The main advantage of trading using opposite HF FOODS and Mitsubishi Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF FOODS position performs unexpectedly, Mitsubishi Estate 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 Estate will offset losses from the drop in Mitsubishi Estate's long position.

The idea behind HF FOODS GRP and Mitsubishi Estate Co 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.

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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.