Correlation Between Fuji Electric and Mitsubishi Electric

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

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

Diversification Opportunities for Fuji Electric and Mitsubishi Electric

-0.22

Correlation Coefficient

Fuji Electric  Mitsubishi Electric

Very good diversification

The 3 months correlation between Fuji and Mitsubishi is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fuji Electric Co and Mitsubishi Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Electric and Fuji Electric 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 Fuji Electric Co are associated (or correlated) with Mitsubishi Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Electric has no effect on the direction of Fuji Electric i.e., Fuji Electric and Mitsubishi Electric go up and down completely randomly.

Pair Corralation between Fuji Electric and Mitsubishi Electric

Assuming the 90 days horizon Fuji Electric Co is expected to under-perform the Mitsubishi Electric. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fuji Electric Co is 1.65 times less risky than Mitsubishi Electric. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Mitsubishi Electric is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,743  in Mitsubishi Electric on December 27, 2024 and sell it today you would earn a total of  157.00  from holding Mitsubishi Electric or generate 9.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Fuji Electric Co  vs.  Mitsubishi Electric

Fuji Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fuji Electric Co 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 fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Mitsubishi Electric

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Electric are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Mitsubishi Electric reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fuji Electric and Mitsubishi Electric

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

The idea behind Fuji Electric Co and Mitsubishi Electric 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.