Correlation Between Bio-Techne Corp and Mitsubishi Electric

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

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

Diversification Opportunities for Bio-Techne Corp and Mitsubishi Electric

0.49

Correlation Coefficient

Bio-Techne Corp  Mitsubishi Electric

Very weak diversification

The 3 months correlation between Bio-Techne and Mitsubishi is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bio Techne Corp and Mitsubishi Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Electric and Bio-Techne Corp 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 Bio Techne Corp are associated (or correlated) with Mitsubishi Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Electric has no effect on the direction of Bio-Techne Corp i.e., Bio-Techne Corp and Mitsubishi Electric go up and down completely randomly.

Pair Corralation between Bio-Techne Corp and Mitsubishi Electric

Assuming the 90 days trading horizon Bio Techne Corp is expected to under-perform the Mitsubishi Electric. But the stock apears to be less risky and, when comparing its historical volatility, Bio Techne Corp is 1.07 times less risky than Mitsubishi Electric. The stock trades about -0.06 of its potential returns per unit of risk. The Mitsubishi Electric is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,611  in Mitsubishi Electric on October 11, 2024 and sell it today you would lose (10.00) from holding Mitsubishi Electric or give up 0.62% of portfolio value over 90 days.

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

Bio Techne Corp  vs.  Mitsubishi Electric

Bio Techne Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Techne Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bio-Techne Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mitsubishi Electric

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Electric are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Mitsubishi Electric may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bio-Techne Corp and Mitsubishi Electric

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

The idea behind Bio Techne Corp and Mitsubishi Electric 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.