Correlation Between Mitsui Chemicals and SYSTEMAIR

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

By analyzing existing cross correlation between Mitsui Chemicals and SYSTEMAIR AB, you can compare the effects of market volatilities on Mitsui Chemicals and SYSTEMAIR 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 SYSTEMAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and SYSTEMAIR.

Diversification Opportunities for Mitsui Chemicals and SYSTEMAIR

-0.05

Correlation Coefficient

Mitsui Chemicals  SYSTEMAIR

Good diversification

The 3 months correlation between Mitsui and SYSTEMAIR is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB 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 are associated (or correlated) with SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and SYSTEMAIR go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and SYSTEMAIR

Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 1.13 times more return on investment than SYSTEMAIR. However, Mitsui Chemicals is 1.13 times more volatile than SYSTEMAIR AB. It trades about -0.16 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about -0.23 per unit of risk. If you would invest  2,120  in Mitsui Chemicals on October 10, 2024 and sell it today you would lose (100.00) from holding Mitsui Chemicals or give up 4.72% of portfolio value over 90 days.

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

Mitsui Chemicals  vs.  SYSTEMAIR AB

Mitsui Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

SYSTEMAIR AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SYSTEMAIR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mitsui Chemicals and SYSTEMAIR

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

The idea behind Mitsui Chemicals and SYSTEMAIR AB 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..