Correlation Between Corporacion America and Mitsubishi UFJ

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

By analyzing existing cross correlation between Corporacion America Airports and Mitsubishi UFJ Lease, you can compare the effects of market volatilities on Corporacion America and Mitsubishi UFJ 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 Corporacion America with a short position of Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporacion America and Mitsubishi UFJ.

Diversification Opportunities for Corporacion America and Mitsubishi UFJ

-0.32

Correlation Coefficient

Corporacion America  Mitsubishi UFJ

Very good diversification

The 3 months correlation between Corporacion and Mitsubishi is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion America Airports and Mitsubishi UFJ Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Lease and Corporacion America 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 Corporacion America Airports are associated (or correlated) with Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Lease has no effect on the direction of Corporacion America i.e., Corporacion America and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Corporacion America and Mitsubishi UFJ

Given the investment horizon of 90 days Corporacion America Airports is expected to generate 0.75 times more return on investment than Mitsubishi UFJ. However, Corporacion America Airports is 1.33 times less risky than Mitsubishi UFJ. It trades about 0.17 of its potential returns per unit of risk. Mitsubishi UFJ Lease is currently generating about -0.06 per unit of risk. If you would invest  1,456  in Corporacion America Airports on September 4, 2024 and sell it today you would earn a total of  387.00  from holding Corporacion America Airports or generate 26.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Corporacion America Airports  vs.  Mitsubishi UFJ Lease

Corporacion America

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Corporacion America reported solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi UFJ Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi UFJ Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Corporacion America and Mitsubishi UFJ

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

The idea behind Corporacion America Airports and Mitsubishi UFJ Lease 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.