Correlation Between GAMESTOP and MITSUBISHI STEEL

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

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

Diversification Opportunities for GAMESTOP and MITSUBISHI STEEL

0.47

Correlation Coefficient

GAMESTOP  MITSUBISHI STEEL

Very weak diversification

The 3 months correlation between GAMESTOP and MITSUBISHI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP and MITSUBISHI STEEL MFG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITSUBISHI STEEL MFG and GAMESTOP 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 GAMESTOP are associated (or correlated) with MITSUBISHI STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITSUBISHI STEEL MFG has no effect on the direction of GAMESTOP i.e., GAMESTOP and MITSUBISHI STEEL go up and down completely randomly.

Pair Corralation between GAMESTOP and MITSUBISHI STEEL

Assuming the 90 days trading horizon GAMESTOP is expected to generate 3.29 times more return on investment than MITSUBISHI STEEL. However, GAMESTOP is 3.29 times more volatile than MITSUBISHI STEEL MFG. It trades about 0.27 of its potential returns per unit of risk. MITSUBISHI STEEL MFG is currently generating about 0.21 per unit of risk. If you would invest  1,901  in GAMESTOP on September 25, 2024 and sell it today you would earn a total of  1,050  from holding GAMESTOP or generate 55.23% return on investment over 90 days.

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

GAMESTOP  vs.  MITSUBISHI STEEL MFG

GAMESTOP

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GAMESTOP are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GAMESTOP unveiled solid returns over the last few months and may actually be approaching a breakup point.

MITSUBISHI STEEL MFG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MITSUBISHI STEEL MFG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MITSUBISHI STEEL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GAMESTOP and MITSUBISHI STEEL

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

The idea behind GAMESTOP and MITSUBISHI STEEL MFG 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.