Correlation Between Mitsui Chemicals and RETAIL FOOD

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

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

Diversification Opportunities for Mitsui Chemicals and RETAIL FOOD

0.27

Correlation Coefficient

Mitsui Chemicals  RETAIL FOOD

Modest diversification

The 3 months correlation between Mitsui and RETAIL is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and RETAIL FOOD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RETAIL FOOD GROUP 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 RETAIL FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RETAIL FOOD GROUP has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and RETAIL FOOD go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and RETAIL FOOD

Assuming the 90 days trading horizon Mitsui Chemicals is expected to generate 0.64 times more return on investment than RETAIL FOOD. However, Mitsui Chemicals is 1.56 times less risky than RETAIL FOOD. It trades about 0.14 of its potential returns per unit of risk. RETAIL FOOD GROUP is currently generating about 0.08 per unit of risk. If you would invest  1,690  in Mitsui Chemicals on April 5, 2025 and sell it today you would earn a total of  310.00  from holding Mitsui Chemicals or generate 18.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Mitsui Chemicals  vs.  RETAIL FOOD GROUP

Mitsui Chemicals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Chemicals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Mitsui Chemicals exhibited solid returns over the last few months and may actually be approaching a breakup point.

RETAIL FOOD GROUP

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RETAIL FOOD GROUP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, RETAIL FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitsui Chemicals and RETAIL FOOD

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

The idea behind Mitsui Chemicals and RETAIL FOOD 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.