Correlation Between Mitsubishi Heavy and Manitex International

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

Diversification Opportunities for Mitsubishi Heavy and Manitex International

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Mitsubishi and Manitex is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Heavy Industries and Manitex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitex International and Mitsubishi Heavy 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 Heavy Industries are associated (or correlated) with Manitex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitex International has no effect on the direction of Mitsubishi Heavy i.e., Mitsubishi Heavy and Manitex International go up and down completely randomly.

Pair Corralation between Mitsubishi Heavy and Manitex International

Assuming the 90 days horizon Mitsubishi Heavy Industries is expected to generate 118.84 times more return on investment than Manitex International. However, Mitsubishi Heavy is 118.84 times more volatile than Manitex International. It trades about 0.43 of its potential returns per unit of risk. Manitex International is currently generating about 0.01 per unit of risk. If you would invest  290.00  in Mitsubishi Heavy Industries on December 29, 2023 and sell it today you would earn a total of  663.00  from holding Mitsubishi Heavy Industries or generate 228.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy88.28%
ValuesDaily Returns

Mitsubishi Heavy Industries  vs.  Manitex International

 Performance 
       Timeline  
Mitsubishi Heavy Ind 

Risk-Adjusted Performance

27 of 100

 
Low
 
High
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Heavy Industries are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Mitsubishi Heavy reported solid returns over the last few months and may actually be approaching a breakup point.
Manitex International 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Manitex International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Mitsubishi Heavy and Manitex International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mitsubishi Heavy and Manitex International

The main advantage of trading using opposite Mitsubishi Heavy and Manitex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Heavy position performs unexpectedly, Manitex International 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 Manitex International will offset losses from the drop in Manitex International's long position.
The idea behind Mitsubishi Heavy Industries and Manitex International 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.

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