Correlation Between Mitsui Fudosan and Fastighets

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

By analyzing existing cross correlation between Mitsui Fudosan Co and Fastighets AB Balder, you can compare the effects of market volatilities on Mitsui Fudosan and Fastighets 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 Fudosan with a short position of Fastighets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Fudosan and Fastighets.

Diversification Opportunities for Mitsui Fudosan and Fastighets

0.68

Correlation Coefficient

Mitsui Fudosan  Fastighets

Poor diversification

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

Pair Corralation between Mitsui Fudosan and Fastighets

Assuming the 90 days horizon Mitsui Fudosan Co is expected to under-perform the Fastighets. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mitsui Fudosan Co is 1.62 times less risky than Fastighets. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Fastighets AB Balder is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  798.00  in Fastighets AB Balder on September 27, 2024 and sell it today you would lose (148.00) from holding Fastighets AB Balder or give up 18.55% of portfolio value over 90 days.

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

Mitsui Fudosan Co  vs.  Fastighets AB Balder

Mitsui Fudosan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsui Fudosan Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental 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.

Fastighets AB Balder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fastighets AB Balder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mitsui Fudosan and Fastighets

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

The idea behind Mitsui Fudosan Co and Fastighets AB Balder 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.