Correlation Between Mitsui Chemicals and Avista

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

By analyzing existing cross correlation between Mitsui Chemicals ADR and Avista, you can compare the effects of market volatilities on Mitsui Chemicals and Avista 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 Avista. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Avista.

Diversification Opportunities for Mitsui Chemicals and Avista

-0.84

Correlation Coefficient

Mitsui Chemicals  Avista

Pay attention - limited upside

The 3 months correlation between Mitsui and Avista is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals ADR and Avista in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avista 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 ADR are associated (or correlated) with Avista. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avista has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Avista go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and Avista

Assuming the 90 days horizon Mitsui Chemicals ADR is expected to under-perform the Avista. In addition to that, Mitsui Chemicals is 1.69 times more volatile than Avista. It trades about -0.22 of its total potential returns per unit of risk. Avista is currently generating about 0.51 per unit of volatility. If you would invest  3,760  in Avista on September 1, 2025 and sell it today you would earn a total of  378.00  from holding Avista or generate 10.05% return on investment over 90 days.

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

Mitsui Chemicals ADR  vs.  Avista

Mitsui Chemicals ADR

Risk-Adjusted Performance

Weakest

Over the last 90 days Mitsui Chemicals ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Avista

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avista are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Avista sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitsui Chemicals and Avista

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

The idea behind Mitsui Chemicals ADR and Avista 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.