Correlation Between ALBIS LEASING and Mitsui Chemicals

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

By analyzing existing cross correlation between ALBIS LEASING AG and Mitsui Chemicals, you can compare the effects of market volatilities on ALBIS LEASING 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 ALBIS LEASING with a short position of Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALBIS LEASING and Mitsui Chemicals.

Diversification Opportunities for ALBIS LEASING and Mitsui Chemicals

0.12

Correlation Coefficient

ALBIS LEASING  Mitsui Chemicals

Average diversification

The 3 months correlation between ALBIS and Mitsui is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ALBIS LEASING AG and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals and ALBIS LEASING 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 ALBIS LEASING AG 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 ALBIS LEASING i.e., ALBIS LEASING and Mitsui Chemicals go up and down completely randomly.

Pair Corralation between ALBIS LEASING and Mitsui Chemicals

Assuming the 90 days trading horizon ALBIS LEASING is expected to generate 47.93 times less return on investment than Mitsui Chemicals. But when comparing it to its historical volatility, ALBIS LEASING AG is 2.28 times less risky than Mitsui Chemicals. It trades about 0.0 of its potential returns per unit of risk. Mitsui Chemicals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,036  in Mitsui Chemicals on December 29, 2024 and sell it today you would earn a total of  84.00  from holding Mitsui Chemicals or generate 4.13% return on investment over 90 days.

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

ALBIS LEASING AG  vs.  Mitsui Chemicals

ALBIS LEASING AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALBIS LEASING AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, ALBIS LEASING is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Mitsui Chemicals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Chemicals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Mitsui Chemicals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ALBIS LEASING and Mitsui Chemicals

The main advantage of trading using opposite ALBIS LEASING and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALBIS LEASING 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.

The idea behind ALBIS LEASING AG and Mitsui Chemicals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.