Correlation Between Mitsui Chemicals and Uber Technologies

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

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

Diversification Opportunities for Mitsui Chemicals and Uber Technologies

0.31

Correlation Coefficient

Mitsui Chemicals  Uber Technologies

Weak diversification

The 3 months correlation between Mitsui and Uber is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Uber Technologies go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and Uber Technologies

Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the Uber Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Mitsui Chemicals is 1.6 times less risky than Uber Technologies. The stock trades about -0.16 of its potential returns per unit of risk. The Uber Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,251  in Uber Technologies on October 10, 2024 and sell it today you would earn a total of  163.00  from holding Uber Technologies or generate 2.61% return on investment over 90 days.

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

Mitsui Chemicals  vs.  Uber Technologies

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.

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Mitsui Chemicals and Uber Technologies

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

The idea behind Mitsui Chemicals and Uber Technologies 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.