Correlation Between Moelis and Idemitsu Kosan

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

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

Diversification Opportunities for Moelis and Idemitsu Kosan

-0.33

Correlation Coefficient

Moelis  Idemitsu Kosan

Very good diversification

The 3 months correlation between Moelis and Idemitsu is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and Idemitsu Kosan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan and Moelis 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 Moelis Co are associated (or correlated) with Idemitsu Kosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idemitsu Kosan has no effect on the direction of Moelis i.e., Moelis and Idemitsu Kosan go up and down completely randomly.

Pair Corralation between Moelis and Idemitsu Kosan

Allowing for the 90-day total investment horizon Moelis Co is expected to generate 0.76 times more return on investment than Idemitsu Kosan. However, Moelis Co is 1.32 times less risky than Idemitsu Kosan. It trades about 0.07 of its potential returns per unit of risk. Idemitsu Kosan Co is currently generating about 0.02 per unit of risk. If you would invest  4,111  in Moelis Co on October 11, 2024 and sell it today you would earn a total of  3,362  from holding Moelis Co or generate 81.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Moelis Co  vs.  Idemitsu Kosan Co

Moelis

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moelis Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Moelis may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Idemitsu Kosan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Moelis and Idemitsu Kosan

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

The idea behind Moelis Co and Idemitsu Kosan Co 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.