Correlation Between Mitsui Chemicals and HOCHSCHILD MINING

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

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

Diversification Opportunities for Mitsui Chemicals and HOCHSCHILD MINING

-0.08

Correlation Coefficient

Mitsui Chemicals  HOCHSCHILD MINING

Good diversification

The 3 months correlation between Mitsui and HOCHSCHILD is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and HOCHSCHILD MINING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOCHSCHILD MINING 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 HOCHSCHILD MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOCHSCHILD MINING has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and HOCHSCHILD MINING go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and HOCHSCHILD MINING

Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the HOCHSCHILD MINING. But the stock apears to be less risky and, when comparing its historical volatility, Mitsui Chemicals is 1.77 times less risky than HOCHSCHILD MINING. The stock trades about -0.05 of its potential returns per unit of risk. The HOCHSCHILD MINING is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  288.00  in HOCHSCHILD MINING on October 20, 2024 and sell it today you would lose (19.00) from holding HOCHSCHILD MINING or give up 6.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Mitsui Chemicals  vs.  HOCHSCHILD MINING

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 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.

HOCHSCHILD MINING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOCHSCHILD MINING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, HOCHSCHILD MINING is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mitsui Chemicals and HOCHSCHILD MINING

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

The idea behind Mitsui Chemicals and HOCHSCHILD MINING 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.