Correlation Between Mitsui Chemicals and Dupont De

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

By analyzing existing cross correlation between Mitsui Chemicals ADR and Dupont De Nemours, you can compare the effects of market volatilities on Mitsui Chemicals and Dupont De 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 Chemicals with a short position of Dupont De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Dupont De.

Diversification Opportunities for Mitsui Chemicals and Dupont De

0.83

Correlation Coefficient

Mitsui Chemicals  Dupont De

Very poor diversification

The 3 months correlation between Mitsui and Dupont is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals ADR and Dupont De Nemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dupont De Nemours and Mitsui Chemicals 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 Chemicals ADR are associated (or correlated) with Dupont De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dupont De Nemours has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Dupont De go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and Dupont De

Assuming the 90 days horizon Mitsui Chemicals ADR is expected to under-perform the Dupont De. In addition to that, Mitsui Chemicals is 2.72 times more volatile than Dupont De Nemours. It trades about -0.05 of its total potential returns per unit of risk. Dupont De Nemours is currently generating about -0.01 per unit of volatility. If you would invest  7,855  in Dupont De Nemours on September 29, 2024 and sell it today you would lose (192.00) from holding Dupont De Nemours or give up 2.44% of portfolio value over 90 days.

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

Mitsui Chemicals ADR  vs.  Dupont De Nemours

Mitsui Chemicals ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsui Chemicals ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Mitsui Chemicals and Dupont De

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

The idea behind Mitsui Chemicals ADR and Dupont De Nemours 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.