Correlation Between Mitsui Chemicals and Capgemini

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

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

Diversification Opportunities for Mitsui Chemicals and Capgemini

-0.41

Correlation Coefficient

Mitsui Chemicals  Capgemini

Very good diversification

The 3 months correlation between Mitsui and Capgemini is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE 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 Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Capgemini go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and Capgemini

Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 0.64 times more return on investment than Capgemini. However, Mitsui Chemicals is 1.56 times less risky than Capgemini. It trades about 0.1 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.04 per unit of risk. If you would invest  2,040  in Mitsui Chemicals on December 23, 2024 and sell it today you would earn a total of  160.00  from holding Mitsui Chemicals or generate 7.84% return on investment over 90 days.

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

Mitsui Chemicals  vs.  Capgemini SE

Mitsui Chemicals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Chemicals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, Mitsui Chemicals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Capgemini SE

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mitsui Chemicals and Capgemini

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

The idea behind Mitsui Chemicals and Capgemini SE 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.