Correlation Between Mitsui Chemicals and Wilh Wilhelmsen

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

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

Diversification Opportunities for Mitsui Chemicals and Wilh Wilhelmsen

-0.41

Correlation Coefficient

Mitsui Chemicals  Wilh Wilhelmsen

Very good diversification

The 3 months correlation between Mitsui and Wilh is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Wilh Wilhelmsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilh Wilhelmsen Holding 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 Wilh Wilhelmsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilh Wilhelmsen Holding has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Wilh Wilhelmsen go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and Wilh Wilhelmsen

Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 0.83 times more return on investment than Wilh Wilhelmsen. However, Mitsui Chemicals is 1.21 times less risky than Wilh Wilhelmsen. It trades about 0.06 of its potential returns per unit of risk. Wilh Wilhelmsen Holding is currently generating about -0.02 per unit of risk. If you would invest  2,036  in Mitsui Chemicals on December 29, 2024 and sell it today you would earn a total of  84.00  from holding Mitsui Chemicals or generate 4.13% return on investment over 90 days.

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

Mitsui Chemicals  vs.  Wilh Wilhelmsen Holding

Mitsui Chemicals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Chemicals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Wilh Wilhelmsen Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wilh Wilhelmsen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Wilh Wilhelmsen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mitsui Chemicals and Wilh Wilhelmsen

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

The idea behind Mitsui Chemicals and Wilh Wilhelmsen Holding 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.