Correlation Between Mitsubishi Materials and BEIJJINGNENG CLERGHYC1

Can any of the company-specific risk be diversified away by investing in both Mitsubishi Materials and BEIJJINGNENG CLERGHYC1 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 Materials and BEIJJINGNENG CLERGHYC1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mitsubishi Materials and BEIJJINGNENG CLERGHYC1, you can compare the effects of market volatilities on Mitsubishi Materials and BEIJJINGNENG CLERGHYC1 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 Materials with a short position of BEIJJINGNENG CLERGHYC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Materials and BEIJJINGNENG CLERGHYC1.

Diversification Opportunities for Mitsubishi Materials and BEIJJINGNENG CLERGHYC1

0.16

Correlation Coefficient

Mitsubishi Materials  BEIJJINGNENG CLERGHYC1

Average diversification

The 3 months correlation between Mitsubishi and BEIJJINGNENG is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Materials and BEIJJINGNENG CLERGHYC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEIJJINGNENG CLERGHYC1 and Mitsubishi Materials 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 Materials are associated (or correlated) with BEIJJINGNENG CLERGHYC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEIJJINGNENG CLERGHYC1 has no effect on the direction of Mitsubishi Materials i.e., Mitsubishi Materials and BEIJJINGNENG CLERGHYC1 go up and down completely randomly.

Pair Corralation between Mitsubishi Materials and BEIJJINGNENG CLERGHYC1

Assuming the 90 days trading horizon Mitsubishi Materials is expected to generate 0.54 times more return on investment than BEIJJINGNENG CLERGHYC1. However, Mitsubishi Materials is 1.84 times less risky than BEIJJINGNENG CLERGHYC1. It trades about 0.1 of its potential returns per unit of risk. BEIJJINGNENG CLERGHYC1 is currently generating about 0.04 per unit of risk. If you would invest  1,412  in Mitsubishi Materials on December 30, 2024 and sell it today you would earn a total of  128.00  from holding Mitsubishi Materials or generate 9.07% return on investment over 90 days.

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

Mitsubishi Materials  vs.  BEIJJINGNENG CLERGHYC1

Mitsubishi Materials

Risk-Adjusted Performance

OK

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

BEIJJINGNENG CLERGHYC1

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BEIJJINGNENG CLERGHYC1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BEIJJINGNENG CLERGHYC1 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 Materials and BEIJJINGNENG CLERGHYC1

The main advantage of trading using opposite Mitsubishi Materials and BEIJJINGNENG CLERGHYC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Materials position performs unexpectedly, BEIJJINGNENG CLERGHYC1 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 BEIJJINGNENG CLERGHYC1 will offset losses from the drop in BEIJJINGNENG CLERGHYC1's long position.

The idea behind Mitsubishi Materials and BEIJJINGNENG CLERGHYC1 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.