Correlation Between Mitsui Chemicals and DATAGROUP

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

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

Diversification Opportunities for Mitsui Chemicals and DATAGROUP

-0.3

Correlation Coefficient

Mitsui Chemicals  DATAGROUP

Very good diversification

The 3 months correlation between Mitsui and DATAGROUP is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and DATAGROUP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATAGROUP 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 DATAGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATAGROUP SE has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and DATAGROUP go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and DATAGROUP

Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 0.5 times more return on investment than DATAGROUP. However, Mitsui Chemicals is 1.99 times less risky than DATAGROUP. It trades about 0.06 of its potential returns per unit of risk. DATAGROUP SE is currently generating about -0.06 per unit of risk. If you would invest  2,036  in Mitsui Chemicals on December 29, 2024 and sell it today you would earn a total of  84.00  from holding Mitsui Chemicals or generate 4.13% return on investment over 90 days.

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

Mitsui Chemicals  vs.  DATAGROUP SE

Mitsui Chemicals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Chemicals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Mitsui Chemicals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

DATAGROUP SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days DATAGROUP SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Mitsui Chemicals and DATAGROUP

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

The idea behind Mitsui Chemicals and DATAGROUP 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 Commodity Directory module to find actively traded commodities issued by global exchanges.