Correlation Between Mitsubishi Estate and Frontera

Can any of the company-specific risk be diversified away by investing in both Mitsubishi Estate and Frontera 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 Frontera 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 Frontera Group, you can compare the effects of market volatilities on Mitsubishi Estate and Frontera 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 Frontera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Estate and Frontera.

Diversification Opportunities for Mitsubishi Estate and Frontera

0.0

Correlation Coefficient

Mitsubishi Estate  Frontera

Pay attention - limited upside

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

Pair Corralation between Mitsubishi Estate and Frontera

Assuming the 90 days horizon Mitsubishi Estate is expected to generate 5.7 times less return on investment than Frontera. But when comparing it to its historical volatility, Mitsubishi Estate Co is 8.87 times less risky than Frontera. It trades about 0.02 of its potential returns per unit of risk. Frontera Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.60  in Frontera Group on October 21, 2024 and sell it today you would lose (1.59) from holding Frontera Group or give up 99.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Mitsubishi Estate Co  vs.  Frontera Group

Mitsubishi Estate

Risk-Adjusted Performance

0 of 100

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.

Frontera Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mitsubishi Estate and Frontera

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

The idea behind Mitsubishi Estate Co and Frontera 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.