Correlation Between Sydbank A/S and Mitsui Mining

Can any of the company-specific risk be diversified away by investing in both Sydbank A/S and Mitsui Mining 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 Sydbank A/S and Mitsui Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sydbank AS and Mitsui Mining Smelting, you can compare the effects of market volatilities on Sydbank A/S and Mitsui Mining 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 Sydbank A/S with a short position of Mitsui Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sydbank A/S and Mitsui Mining.

Diversification Opportunities for Sydbank A/S and Mitsui Mining

-0.59

Correlation Coefficient

Sydbank A/S  Mitsui Mining

Excellent diversification

The 3 months correlation between Sydbank and Mitsui is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank AS and Mitsui Mining Smelting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Mining Smelting and Sydbank A/S 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 Sydbank AS are associated (or correlated) with Mitsui Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Mining Smelting has no effect on the direction of Sydbank A/S i.e., Sydbank A/S and Mitsui Mining go up and down completely randomly.

Pair Corralation between Sydbank A/S and Mitsui Mining

Assuming the 90 days horizon Sydbank AS is expected to generate 0.81 times more return on investment than Mitsui Mining. However, Sydbank AS is 1.23 times less risky than Mitsui Mining. It trades about 0.26 of its potential returns per unit of risk. Mitsui Mining Smelting is currently generating about 0.02 per unit of risk. If you would invest  4,794  in Sydbank AS on December 22, 2024 and sell it today you would earn a total of  1,276  from holding Sydbank AS or generate 26.62% return on investment over 90 days.

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

Sydbank AS  vs.  Mitsui Mining Smelting

Sydbank A/S

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank AS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sydbank A/S reported solid returns over the last few months and may actually be approaching a breakup point.

Mitsui Mining Smelting

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Mining Smelting are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Mitsui Mining is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sydbank A/S and Mitsui Mining

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

The idea behind Sydbank AS and Mitsui Mining Smelting 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.