Correlation Between Mitsubishi Gas and ZIM Integrated

Can any of the company-specific risk be diversified away by investing in both Mitsubishi Gas and ZIM Integrated 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 Mitsubishi Gas and ZIM Integrated into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mitsubishi Gas Chemical and ZIM Integrated Shipping, you can compare the effects of market volatilities on Mitsubishi Gas and ZIM Integrated 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 Mitsubishi Gas with a short position of ZIM Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Gas and ZIM Integrated.

Diversification Opportunities for Mitsubishi Gas and ZIM Integrated

0.2

Correlation Coefficient

Mitsubishi Gas  ZIM Integrated

Modest diversification

The 3 months correlation between Mitsubishi and ZIM is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Gas Chemical and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping and Mitsubishi Gas 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 Mitsubishi Gas Chemical are associated (or correlated) with ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of Mitsubishi Gas i.e., Mitsubishi Gas and ZIM Integrated go up and down completely randomly.

Pair Corralation between Mitsubishi Gas and ZIM Integrated

Assuming the 90 days trading horizon Mitsubishi Gas Chemical is expected to generate 0.27 times more return on investment than ZIM Integrated. However, Mitsubishi Gas Chemical is 3.75 times less risky than ZIM Integrated. It trades about 0.11 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about -0.01 per unit of risk. If you would invest  1,580  in Mitsubishi Gas Chemical on October 26, 2024 and sell it today you would earn a total of  130.00  from holding Mitsubishi Gas Chemical or generate 8.23% return on investment over 90 days.

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

Mitsubishi Gas Chemical  vs.  ZIM Integrated Shipping

Mitsubishi Gas Chemical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Gas Chemical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mitsubishi Gas may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ZIM Integrated Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mitsubishi Gas and ZIM Integrated

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

The idea behind Mitsubishi Gas Chemical and ZIM Integrated Shipping 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.