Correlation Between US Physical and Mitsubishi Gas

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

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

Diversification Opportunities for US Physical and Mitsubishi Gas

0.51

Correlation Coefficient

US Physical  Mitsubishi Gas

Very weak diversification

The 3 months correlation between UPH and Mitsubishi is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding US Physical Therapy and Mitsubishi Gas Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Gas Chemical and US Physical 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 US Physical Therapy are associated (or correlated) with Mitsubishi Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Gas Chemical has no effect on the direction of US Physical i.e., US Physical and Mitsubishi Gas go up and down completely randomly.

Pair Corralation between US Physical and Mitsubishi Gas

Assuming the 90 days horizon US Physical is expected to generate 2.46 times less return on investment than Mitsubishi Gas. In addition to that, US Physical is 1.15 times more volatile than Mitsubishi Gas Chemical. It trades about 0.01 of its total potential returns per unit of risk. Mitsubishi Gas Chemical is currently generating about 0.04 per unit of volatility. If you would invest  1,270  in Mitsubishi Gas Chemical on October 11, 2024 and sell it today you would earn a total of  420.00  from holding Mitsubishi Gas Chemical or generate 33.07% return on investment over 90 days.

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

US Physical Therapy  vs.  Mitsubishi Gas Chemical

US Physical Therapy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US Physical Therapy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, US Physical reported solid returns over the last few months and may actually be approaching a breakup point.

Mitsubishi Gas Chemical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Gas Chemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mitsubishi Gas is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with US Physical and Mitsubishi Gas

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

The idea behind US Physical Therapy and Mitsubishi Gas Chemical 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.