Correlation Between Mitsubishi Estate and Dalata Hotel

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

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

Diversification Opportunities for Mitsubishi Estate and Dalata Hotel

0.0

Correlation Coefficient

Mitsubishi Estate  Dalata Hotel

Pay attention - limited upside

The 3 months correlation between Mitsubishi and Dalata is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Estate Co and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group and Mitsubishi Estate 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 Estate Co are associated (or correlated) with Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of Mitsubishi Estate i.e., Mitsubishi Estate and Dalata Hotel go up and down completely randomly.

Pair Corralation between Mitsubishi Estate and Dalata Hotel

Assuming the 90 days horizon Mitsubishi Estate is expected to generate 2.48 times less return on investment than Dalata Hotel. But when comparing it to its historical volatility, Mitsubishi Estate Co is 1.21 times less risky than Dalata Hotel. It trades about 0.02 of its potential returns per unit of risk. Dalata Hotel Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  336.00  in Dalata Hotel Group on October 5, 2024 and sell it today you would earn a total of  152.00  from holding Dalata Hotel Group or generate 45.24% return on investment over 90 days.

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

Mitsubishi Estate Co  vs.  Dalata Hotel Group

Mitsubishi Estate

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Mitsubishi Estate Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Dalata Hotel Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mitsubishi Estate and Dalata Hotel

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

The idea behind Mitsubishi Estate Co and Dalata Hotel Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.