Correlation Between Mitsui Chemicals and Aurubis AG

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

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

Diversification Opportunities for Mitsui Chemicals and Aurubis AG

-0.65

Correlation Coefficient

Mitsui Chemicals  Aurubis AG

Excellent diversification

The 3 months correlation between Mitsui and Aurubis is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Aurubis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurubis AG 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 Aurubis AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurubis AG has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Aurubis AG go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and Aurubis AG

Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 0.78 times more return on investment than Aurubis AG. However, Mitsui Chemicals is 1.29 times less risky than Aurubis AG. It trades about 0.01 of its potential returns per unit of risk. Aurubis AG is currently generating about 0.0 per unit of risk. If you would invest  2,020  in Mitsui Chemicals on October 5, 2024 and sell it today you would earn a total of  80.00  from holding Mitsui Chemicals or generate 3.96% return on investment over 90 days.

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

Mitsui Chemicals  vs.  Aurubis AG

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 fragile 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.

Aurubis AG

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Aurubis AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Aurubis AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitsui Chemicals and Aurubis AG

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

The idea behind Mitsui Chemicals and Aurubis AG 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.