Correlation Between Mitsui Chemicals and PATRIOT BATTERY

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

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

Diversification Opportunities for Mitsui Chemicals and PATRIOT BATTERY

0.46

Correlation Coefficient

Mitsui Chemicals  PATRIOT BATTERY

Very weak diversification

The 3 months correlation between Mitsui and PATRIOT is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and PATRIOT BATTERY METINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PATRIOT BATTERY METINC 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 PATRIOT BATTERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PATRIOT BATTERY METINC has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and PATRIOT BATTERY go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and PATRIOT BATTERY

Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the PATRIOT BATTERY. But the stock apears to be less risky and, when comparing its historical volatility, Mitsui Chemicals is 4.56 times less risky than PATRIOT BATTERY. The stock trades about -0.07 of its potential returns per unit of risk. The PATRIOT BATTERY METINC is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  194.00  in PATRIOT BATTERY METINC on October 9, 2024 and sell it today you would earn a total of  56.00  from holding PATRIOT BATTERY METINC or generate 28.87% return on investment over 90 days.

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

Mitsui Chemicals  vs.  PATRIOT BATTERY METINC

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.

PATRIOT BATTERY METINC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PATRIOT BATTERY METINC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, PATRIOT BATTERY is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mitsui Chemicals and PATRIOT BATTERY

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

The idea behind Mitsui Chemicals and PATRIOT BATTERY METINC 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.