Correlation Between Mitsui Chemicals and Adtalem Global

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

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

Diversification Opportunities for Mitsui Chemicals and Adtalem Global

-0.35

Correlation Coefficient

Mitsui Chemicals  Adtalem Global

Very good diversification

The 3 months correlation between Mitsui and Adtalem is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education 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 Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Adtalem Global go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and Adtalem Global

Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the Adtalem Global. But the stock apears to be less risky and, when comparing its historical volatility, Mitsui Chemicals is 1.45 times less risky than Adtalem Global. The stock trades about -0.03 of its potential returns per unit of risk. The Adtalem Global Education is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,750  in Adtalem Global Education on December 4, 2024 and sell it today you would earn a total of  750.00  from holding Adtalem Global Education or generate 8.57% 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.  Adtalem Global Education

Mitsui Chemicals

Risk-Adjusted Performance

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 rather sound forward indicators, Mitsui Chemicals is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Adtalem Global Education

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Adtalem Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mitsui Chemicals and Adtalem Global

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

The idea behind Mitsui Chemicals and Adtalem Global Education 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.