Correlation Between Mitsui Co and Grupo Carso

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

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

Diversification Opportunities for Mitsui Co and Grupo Carso

0.51

Correlation Coefficient

Mitsui Co  Grupo Carso

Very weak diversification

The @@bw1eo months correlation between Mitsui and Grupo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Co and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB and Mitsui Co 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 Co are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of Mitsui Co i.e., Mitsui Co and Grupo Carso go up and down completely randomly.

Pair Corralation between Mitsui Co and Grupo Carso

Assuming the 90 days horizon Mitsui Co is expected to generate 4.78 times less return on investment than Grupo Carso. But when comparing it to its historical volatility, Mitsui Co is 4.29 times less risky than Grupo Carso. It trades about 0.08 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Grupo Carso SAB on February 4, 2024 and sell it today you would earn a total of  702.00  from holding Grupo Carso SAB or generate 385.71% return on investment over 90 days.

Time Period	@@bw1EO Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.53%
Values	Daily Returns

Mitsui Co  vs.  Grupo Carso SAB

Mitsui Co

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsui Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mitsui Co reported solid returns over the last few months and may actually be approaching a breakup point.

Grupo Carso SAB

Risk-Adjusted Performance

16 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Carso SAB are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mitsui Co and Grupo Carso

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

The idea behind Mitsui Co and Grupo Carso SAB 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.