Correlation Between Mitsui Fudosan and Longfor Group

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

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

Diversification Opportunities for Mitsui Fudosan and Longfor Group

0.13

Correlation Coefficient

Mitsui Fudosan  Longfor Group

Average diversification

The 3 months correlation between Mitsui and Longfor is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Fudosan Co and Longfor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Group Holdings and Mitsui Fudosan 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 Mitsui Fudosan Co are associated (or correlated) with Longfor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Group Holdings has no effect on the direction of Mitsui Fudosan i.e., Mitsui Fudosan and Longfor Group go up and down completely randomly.

Pair Corralation between Mitsui Fudosan and Longfor Group

Assuming the 90 days horizon Mitsui Fudosan Co is expected to generate 0.58 times more return on investment than Longfor Group. However, Mitsui Fudosan Co is 1.73 times less risky than Longfor Group. It trades about 0.1 of its potential returns per unit of risk. Longfor Group Holdings is currently generating about 0.02 per unit of risk. If you would invest  752.00  in Mitsui Fudosan Co on December 29, 2024 and sell it today you would earn a total of  83.00  from holding Mitsui Fudosan Co or generate 11.04% return on investment over 90 days.

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

Mitsui Fudosan Co  vs.  Longfor Group Holdings

Mitsui Fudosan

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Fudosan Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Mitsui Fudosan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Longfor Group Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Longfor Group Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Longfor Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mitsui Fudosan and Longfor Group

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

The idea behind Mitsui Fudosan Co and Longfor Group Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..