Correlation Between Eastman Chemical and Uniper SE
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Uniper SE 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 Eastman Chemical and Uniper SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical Co and Uniper SE, you can compare the effects of market volatilities on Eastman Chemical and Uniper SE 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 Eastman Chemical with a short position of Uniper SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Uniper SE.
Diversification Opportunities for Eastman Chemical and Uniper SE
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastman and Uniper is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co and Uniper SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniper SE and Eastman Chemical 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 Eastman Chemical Co are associated (or correlated) with Uniper SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniper SE has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Uniper SE go up and down completely randomly.
Pair Corralation between Eastman Chemical and Uniper SE
Assuming the 90 days trading horizon Eastman Chemical Co is expected to generate 0.46 times more return on investment than Uniper SE. However, Eastman Chemical Co is 2.16 times less risky than Uniper SE. It trades about 0.08 of its potential returns per unit of risk. Uniper SE is currently generating about -0.06 per unit of risk. If you would invest 8,241 in Eastman Chemical Co on September 2, 2024 and sell it today you would earn a total of 2,231 from holding Eastman Chemical Co or generate 27.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.0% |
| Values | Daily Returns |
Eastman Chemical Co vs. Uniper SE
Performance |
| Timeline |
| Eastman Chemical |
| Uniper SE |
Eastman Chemical and Uniper SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Uniper SE
The main advantage of trading using opposite Eastman Chemical and Uniper SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Uniper SE 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 Uniper SE will offset losses from the drop in Uniper SE's long position.| Eastman Chemical vs. Uniper SE | Eastman Chemical vs. Mulberry Group PLC | Eastman Chemical vs. London Security Plc | Eastman Chemical vs. Triad Group PLC |
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Check out your portfolio center.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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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