Correlation Between Datang International and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both Datang International 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 Datang International and Mitsui Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datang International Power and Mitsui Chemicals, you can compare the effects of market volatilities on Datang International 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 Datang International with a short position of Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and Mitsui Chemicals.
Diversification Opportunities for Datang International and Mitsui Chemicals
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Datang and Mitsui is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals and Datang International 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 Datang International Power 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 Datang International i.e., Datang International and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between Datang International and Mitsui Chemicals
Assuming the 90 days horizon Datang International Power is expected to generate 1.84 times more return on investment than Mitsui Chemicals. However, Datang International is 1.84 times more volatile than Mitsui Chemicals. It trades about 0.05 of its potential returns per unit of risk. Mitsui Chemicals is currently generating about -0.05 per unit of risk. If you would invest 13.00 in Datang International Power on September 24, 2024 and sell it today you would earn a total of 5.00 from holding Datang International Power or generate 38.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Datang International Power vs. Mitsui Chemicals
Performance |
Timeline |
Datang International |
Mitsui Chemicals |
Datang International and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Datang International and Mitsui Chemicals
The main advantage of trading using opposite Datang International and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang International 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.Datang International vs. Yuexiu Transport Infrastructure | Datang International vs. Verizon Communications | Datang International vs. TITANIUM TRANSPORTGROUP | Datang International vs. QUEEN S ROAD |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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