Correlation Between Mitsubishi Electric and Adecco

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

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

Diversification Opportunities for Mitsubishi Electric and Adecco

-0.68

Correlation Coefficient

Mitsubishi Electric  Adecco

Excellent diversification

The 3 months correlation between Mitsubishi and Adecco is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Electric Corp and Adecco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group and Mitsubishi Electric 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 Electric Corp are associated (or correlated) with Adecco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group has no effect on the direction of Mitsubishi Electric i.e., Mitsubishi Electric and Adecco go up and down completely randomly.

Pair Corralation between Mitsubishi Electric and Adecco

Assuming the 90 days horizon Mitsubishi Electric Corp is expected to generate 1.13 times more return on investment than Adecco. However, Mitsubishi Electric is 1.13 times more volatile than Adecco Group. It trades about 0.06 of its potential returns per unit of risk. Adecco Group is currently generating about -0.17 per unit of risk. If you would invest  3,296  in Mitsubishi Electric Corp on September 14, 2024 and sell it today you would earn a total of  215.00  from holding Mitsubishi Electric Corp or generate 6.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Mitsubishi Electric Corp  vs.  Adecco Group

Mitsubishi Electric Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Electric Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Mitsubishi Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Adecco Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecco Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mitsubishi Electric and Adecco

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

The idea behind Mitsubishi Electric Corp and Adecco Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.