Correlation Between Glencore Plc and Mitsui Mining

Can any of the company-specific risk be diversified away by investing in both Glencore Plc and Mitsui Mining 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 Glencore Plc and Mitsui Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Glencore plc and Mitsui Mining Smelting, you can compare the effects of market volatilities on Glencore Plc and Mitsui Mining 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 Glencore Plc with a short position of Mitsui Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore Plc and Mitsui Mining.

Diversification Opportunities for Glencore Plc and Mitsui Mining

0.75

Correlation Coefficient

Glencore Plc  Mitsui Mining

Poor diversification

The 3 months correlation between Glencore and Mitsui is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Glencore plc and Mitsui Mining Smelting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Mining Smelting and Glencore Plc 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 Glencore plc are associated (or correlated) with Mitsui Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Mining Smelting has no effect on the direction of Glencore Plc i.e., Glencore Plc and Mitsui Mining go up and down completely randomly.

Pair Corralation between Glencore Plc and Mitsui Mining

Assuming the 90 days trading horizon Glencore plc is expected to under-perform the Mitsui Mining. In addition to that, Glencore Plc is 1.2 times more volatile than Mitsui Mining Smelting. It trades about -0.11 of its total potential returns per unit of risk. Mitsui Mining Smelting is currently generating about 0.03 per unit of volatility. If you would invest  2,860  in Mitsui Mining Smelting on October 6, 2024 and sell it today you would earn a total of  40.00  from holding Mitsui Mining Smelting or generate 1.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.5%
Values	Daily Returns

Glencore plc  vs.  Mitsui Mining Smelting

Glencore plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore plc 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 fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mitsui Mining Smelting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsui Mining Smelting has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mitsui Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Glencore Plc and Mitsui Mining

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

The idea behind Glencore plc and Mitsui Mining Smelting 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.