Correlation Between Mitsubishi Gas and Orsted AS

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Can any of the company-specific risk be diversified away by investing in both Mitsubishi Gas and Orsted AS 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 Gas and Orsted AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Gas Chemical and Orsted AS, you can compare the effects of market volatilities on Mitsubishi Gas and Orsted AS 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 Gas with a short position of Orsted AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Gas and Orsted AS.

Diversification Opportunities for Mitsubishi Gas and Orsted AS

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Mitsubishi and Orsted is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Gas Chemical and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS and Mitsubishi Gas 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 Gas Chemical are associated (or correlated) with Orsted AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS has no effect on the direction of Mitsubishi Gas i.e., Mitsubishi Gas and Orsted AS go up and down completely randomly.

Pair Corralation between Mitsubishi Gas and Orsted AS

Assuming the 90 days trading horizon Mitsubishi Gas Chemical is expected to generate 0.62 times more return on investment than Orsted AS. However, Mitsubishi Gas Chemical is 1.61 times less risky than Orsted AS. It trades about 0.04 of its potential returns per unit of risk. Orsted AS is currently generating about -0.15 per unit of risk. If you would invest  1,600  in Mitsubishi Gas Chemical on September 18, 2024 and sell it today you would earn a total of  50.00  from holding Mitsubishi Gas Chemical or generate 3.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

Mitsubishi Gas Chemical  vs.  Orsted AS

 Performance 
       Timeline  
Mitsubishi Gas Chemical 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Gas Chemical are ranked lower than 3 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.
Orsted AS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Orsted AS 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 basic 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.

Mitsubishi Gas and Orsted AS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mitsubishi Gas and Orsted AS

The main advantage of trading using opposite Mitsubishi Gas and Orsted AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Gas position performs unexpectedly, Orsted AS 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 Orsted AS will offset losses from the drop in Orsted AS's long position.
The idea behind Mitsubishi Gas Chemical and Orsted AS 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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