Correlation Between Mitsui Chemicals and Hyster Yale

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

By analyzing existing cross correlation between Mitsui Chemicals and Hyster Yale Materials Handling, you can compare the effects of market volatilities on Mitsui Chemicals and Hyster Yale 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 Mitsui Chemicals with a short position of Hyster Yale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Hyster Yale.

Diversification Opportunities for Mitsui Chemicals and Hyster Yale

0.31

Correlation Coefficient

Mitsui Chemicals  Hyster Yale

Weak diversification

The 3 months correlation between Mitsui and Hyster is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale Materials and Mitsui Chemicals 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 Mitsui Chemicals are associated (or correlated) with Hyster Yale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Hyster Yale go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and Hyster Yale

Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the Hyster Yale. But the stock apears to be less risky and, when comparing its historical volatility, Mitsui Chemicals is 1.76 times less risky than Hyster Yale. The stock trades about -0.14 of its potential returns per unit of risk. The Hyster Yale Materials Handling is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  5,414  in Hyster Yale Materials Handling on September 23, 2024 and sell it today you would lose (674.00) from holding Hyster Yale Materials Handling or give up 12.45% of portfolio value over 90 days.

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

Mitsui Chemicals  vs.  Hyster Yale Materials Handling

Mitsui Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsui Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Mitsui Chemicals and Hyster Yale

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

The idea behind Mitsui Chemicals and Hyster Yale Materials Handling 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.