Correlation Between TELECOM ITALRISP and Mitsui Chemicals

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

By analyzing existing cross correlation between TELECOM ITALRISP ADR10 and Mitsui Chemicals, you can compare the effects of market volatilities on TELECOM ITALRISP and Mitsui Chemicals 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 TELECOM ITALRISP with a short position of Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of TELECOM ITALRISP and Mitsui Chemicals.

Diversification Opportunities for TELECOM ITALRISP and Mitsui Chemicals

0.36

Correlation Coefficient

TELECOM ITALRISP  Mitsui Chemicals

Weak diversification

The 3 months correlation between TELECOM and Mitsui is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding TELECOM ITALRISP ADR10 and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals and TELECOM ITALRISP 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 TELECOM ITALRISP ADR10 are associated (or correlated) with Mitsui Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Chemicals has no effect on the direction of TELECOM ITALRISP i.e., TELECOM ITALRISP and Mitsui Chemicals go up and down completely randomly.

Pair Corralation between TELECOM ITALRISP and Mitsui Chemicals

Assuming the 90 days trading horizon TELECOM ITALRISP ADR10 is expected to generate 1.11 times more return on investment than Mitsui Chemicals. However, TELECOM ITALRISP is 1.11 times more volatile than Mitsui Chemicals. It trades about 0.18 of its potential returns per unit of risk. Mitsui Chemicals is currently generating about 0.06 per unit of risk. If you would invest  366.00  in TELECOM ITALRISP ADR10 on April 23, 2025 and sell it today you would earn a total of  72.00  from holding TELECOM ITALRISP ADR10 or generate 19.67% return on investment over 90 days.

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

TELECOM ITALRISP ADR10  vs.  Mitsui Chemicals

TELECOM ITALRISP ADR10

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TELECOM ITALRISP ADR10 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward indicators, TELECOM ITALRISP reported solid returns over the last few months and may actually be approaching a breakup point.

Mitsui Chemicals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Chemicals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Mitsui Chemicals is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TELECOM ITALRISP and Mitsui Chemicals

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

The idea behind TELECOM ITALRISP ADR10 and Mitsui Chemicals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.