Correlation Between FMC and Mitsui Mining

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

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

Diversification Opportunities for FMC and Mitsui Mining

0.6

Correlation Coefficient

FMC  Mitsui Mining

Poor diversification

The 3 months correlation between FMC and Mitsui is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and Mitsui Mining Smelting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Mining Smelting and FMC 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 FMC Corporation are associated (or correlated) with Mitsui Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Mining Smelting has no effect on the direction of FMC i.e., FMC and Mitsui Mining go up and down completely randomly.

Pair Corralation between FMC and Mitsui Mining

Considering the 90-day investment horizon FMC Corporation is expected to under-perform the Mitsui Mining. In addition to that, FMC is 1.18 times more volatile than Mitsui Mining Smelting. It trades about -0.29 of its total potential returns per unit of risk. Mitsui Mining Smelting is currently generating about 0.03 per unit of volatility. If you would invest  2,860  in Mitsui Mining Smelting on October 6, 2024 and sell it today you would earn a total of  40.00  from holding Mitsui Mining Smelting or generate 1.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.56%
Values	Daily Returns

FMC Corp.  vs.  Mitsui Mining Smelting

FMC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FMC Corporation 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 primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Mitsui Mining Smelting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsui Mining Smelting has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mitsui Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FMC and Mitsui Mining

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

The idea behind FMC Corporation and Mitsui Mining Smelting 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.