Correlation Between Mitsui Chemicals and SOCKET MOBILE

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

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

Diversification Opportunities for Mitsui Chemicals and SOCKET MOBILE

-0.3

Correlation Coefficient

Mitsui Chemicals  SOCKET MOBILE

Very good diversification

The 3 months correlation between Mitsui and SOCKET is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and SOCKET MOBILE NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOCKET MOBILE NEW 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 SOCKET MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOCKET MOBILE NEW has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and SOCKET MOBILE go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and SOCKET MOBILE

Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the SOCKET MOBILE. But the stock apears to be less risky and, when comparing its historical volatility, Mitsui Chemicals is 2.4 times less risky than SOCKET MOBILE. The stock trades about -0.03 of its potential returns per unit of risk. The SOCKET MOBILE NEW is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  119.00  in SOCKET MOBILE NEW on October 23, 2024 and sell it today you would earn a total of  25.00  from holding SOCKET MOBILE NEW or generate 21.01% 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.  SOCKET MOBILE NEW

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.

SOCKET MOBILE NEW

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOCKET MOBILE NEW are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, SOCKET MOBILE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitsui Chemicals and SOCKET MOBILE

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

The idea behind Mitsui Chemicals and SOCKET MOBILE NEW 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 Global Correlations module to find global opportunities by holding instruments from different markets.