Correlation Between Mitsubishi Electric and THAI BEVERAGE

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

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

Diversification Opportunities for Mitsubishi Electric and THAI BEVERAGE

-0.26

Correlation Coefficient

Mitsubishi Electric  THAI BEVERAGE

Very good diversification

The 3 months correlation between Mitsubishi and THAI is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Electric and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and Mitsubishi 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 Mitsubishi Electric are associated (or correlated) with THAI BEVERAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THAI BEVERAGE has no effect on the direction of Mitsubishi Electric i.e., Mitsubishi Electric and THAI BEVERAGE go up and down completely randomly.

Pair Corralation between Mitsubishi Electric and THAI BEVERAGE

Assuming the 90 days trading horizon Mitsubishi Electric is expected to generate 1.17 times more return on investment than THAI BEVERAGE. However, Mitsubishi Electric is 1.17 times more volatile than THAI BEVERAGE. It trades about 0.05 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about -0.07 per unit of risk. If you would invest  1,614  in Mitsubishi Electric on December 31, 2024 and sell it today you would earn a total of  110.00  from holding Mitsubishi Electric or generate 6.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mitsubishi Electric  vs.  THAI BEVERAGE

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 uncertain technical and fundamental indicators, Mitsubishi Electric may actually be approaching a critical reversion point that can send shares even higher in May 2025.

THAI BEVERAGE

Risk-Adjusted Performance

Very Weak

Over the last 90 days THAI BEVERAGE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Mitsubishi Electric and THAI BEVERAGE

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

The idea behind Mitsubishi Electric and THAI BEVERAGE 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..