Correlation Between Agnico Eagle and Mitsubishi Gas

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

By analyzing existing cross correlation between Agnico Eagle Mines and Mitsubishi Gas Chemical, you can compare the effects of market volatilities on Agnico Eagle 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 Agnico Eagle with a short position of Mitsubishi Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agnico Eagle and Mitsubishi Gas.

Diversification Opportunities for Agnico Eagle and Mitsubishi Gas

-0.56

Correlation Coefficient

Agnico Eagle  Mitsubishi Gas

Excellent diversification

The 3 months correlation between Agnico and Mitsubishi is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines 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 Agnico Eagle 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 Agnico Eagle Mines 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 Agnico Eagle i.e., Agnico Eagle and Mitsubishi Gas go up and down completely randomly.

Pair Corralation between Agnico Eagle and Mitsubishi Gas

Assuming the 90 days horizon Agnico Eagle Mines is expected to generate 1.04 times more return on investment than Mitsubishi Gas. However, Agnico Eagle is 1.04 times more volatile than Mitsubishi Gas Chemical. It trades about 0.23 of its potential returns per unit of risk. Mitsubishi Gas Chemical is currently generating about -0.14 per unit of risk. If you would invest  7,964  in Agnico Eagle Mines on December 31, 2024 and sell it today you would earn a total of  2,061  from holding Agnico Eagle Mines or generate 25.88% return on investment over 90 days.

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

Agnico Eagle Mines  vs.  Mitsubishi Gas Chemical

Agnico Eagle Mines

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Agnico Eagle reported solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi Gas Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mitsubishi Gas Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Agnico Eagle and Mitsubishi Gas

The main advantage of trading using opposite Agnico Eagle and Mitsubishi Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agnico Eagle 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.

The idea behind Agnico Eagle Mines and Mitsubishi Gas Chemical 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.