Correlation Between Chiba Bank and Mink Therapeutics

Can any of the company-specific risk be diversified away by investing in both Chiba Bank and Mink Therapeutics 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 Chiba Bank and Mink Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chiba Bank Ltd and Mink Therapeutics, you can compare the effects of market volatilities on Chiba Bank and Mink Therapeutics 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 Chiba Bank with a short position of Mink Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and Mink Therapeutics.

Diversification Opportunities for Chiba Bank and Mink Therapeutics

0.0

Correlation Coefficient

Chiba Bank  Mink Therapeutics

Pay attention - limited upside

The 3 months correlation between Chiba and Mink is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank Ltd and Mink Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mink Therapeutics and Chiba Bank 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 Chiba Bank Ltd are associated (or correlated) with Mink Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mink Therapeutics has no effect on the direction of Chiba Bank i.e., Chiba Bank and Mink Therapeutics go up and down completely randomly.

Pair Corralation between Chiba Bank and Mink Therapeutics

Assuming the 90 days horizon Chiba Bank Ltd is expected to generate 0.34 times more return on investment than Mink Therapeutics. However, Chiba Bank Ltd is 2.95 times less risky than Mink Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Mink Therapeutics is currently generating about 0.01 per unit of risk. If you would invest  3,156  in Chiba Bank Ltd on December 4, 2024 and sell it today you would earn a total of  612.00  from holding Chiba Bank Ltd or generate 19.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	46.86%
Values	Daily Returns

Chiba Bank Ltd  vs.  Mink Therapeutics

Chiba Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chiba Bank Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Chiba Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mink Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mink Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking signals, Mink Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chiba Bank and Mink Therapeutics

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

The idea behind Chiba Bank Ltd and Mink Therapeutics 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.