Correlation Between Mitsui Chemicals and PG E

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

By analyzing existing cross correlation between Mitsui Chemicals and PG E P6, you can compare the effects of market volatilities on Mitsui Chemicals and PG E 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 PG E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and PG E.

Diversification Opportunities for Mitsui Chemicals and PG E

-0.66

Correlation Coefficient

Mitsui Chemicals  PG E

Excellent diversification

The 3 months correlation between Mitsui and PCG6 is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and PG E P6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PG E P6 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 PG E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PG E P6 has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and PG E go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and PG E

Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 4.49 times less return on investment than PG E. In addition to that, Mitsui Chemicals is 1.16 times more volatile than PG E P6. It trades about 0.01 of its total potential returns per unit of risk. PG E P6 is currently generating about 0.05 per unit of volatility. If you would invest  1,603  in PG E P6 on October 4, 2024 and sell it today you would earn a total of  537.00  from holding PG E P6 or generate 33.5% 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.  PG E P6

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 uncertain 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.

PG E P6

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PG E P6 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, PG E 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 PG E

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

The idea behind Mitsui Chemicals and PG E P6 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.