Correlation Between Mitsubishi Corp and Mytilineos

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

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

Diversification Opportunities for Mitsubishi Corp and Mytilineos

0.82

Correlation Coefficient

Mitsubishi Corp  Mytilineos

Very poor diversification

The 3 months correlation between Mitsubishi and Mytilineos is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Corp and Mytilineos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mytilineos SA and Mitsubishi Corp 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 Corp are associated (or correlated) with Mytilineos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mytilineos SA has no effect on the direction of Mitsubishi Corp i.e., Mitsubishi Corp and Mytilineos go up and down completely randomly.

Pair Corralation between Mitsubishi Corp and Mytilineos

Assuming the 90 days horizon Mitsubishi Corp is expected to generate 1.94 times less return on investment than Mytilineos. But when comparing it to its historical volatility, Mitsubishi Corp is 3.11 times less risky than Mytilineos. It trades about 0.07 of its potential returns per unit of risk. Mytilineos SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,449  in Mytilineos SA on September 28, 2024 and sell it today you would earn a total of  1,793  from holding Mytilineos SA or generate 123.74% return on investment over 90 days.

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

Mitsubishi Corp  vs.  Mytilineos SA

Mitsubishi Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsubishi Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mytilineos SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mytilineos SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mitsubishi Corp and Mytilineos

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

The idea behind Mitsubishi Corp and Mytilineos SA 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.