Correlation Between Westlake Chemical and Panasonic Corp

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

Diversification Opportunities for Westlake Chemical and Panasonic Corp

-0.88
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Westlake and Panasonic is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and Panasonic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panasonic Corp and Westlake 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 Westlake Chemical Corp are associated (or correlated) with Panasonic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panasonic Corp has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Panasonic Corp go up and down completely randomly.

Pair Corralation between Westlake Chemical and Panasonic Corp

Assuming the 90 days trading horizon Westlake Chemical is expected to generate 5.03 times less return on investment than Panasonic Corp. In addition to that, Westlake Chemical is 1.08 times more volatile than Panasonic Corp. It trades about 0.01 of its total potential returns per unit of risk. Panasonic Corp is currently generating about 0.05 per unit of volatility. If you would invest  109,846  in Panasonic Corp on October 13, 2024 and sell it today you would earn a total of  47,354  from holding Panasonic Corp or generate 43.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy92.18%
ValuesDaily Returns

Westlake Chemical Corp  vs.  Panasonic Corp

 Performance 
       Timeline  
Westlake Chemical Corp 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Westlake Chemical Corp 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Panasonic Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Solid
Over the last 90 days Panasonic Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady basic indicators, Panasonic Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Westlake Chemical and Panasonic Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Westlake Chemical and Panasonic Corp

The main advantage of trading using opposite Westlake Chemical and Panasonic Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Panasonic Corp 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 Panasonic Corp will offset losses from the drop in Panasonic Corp's long position.
The idea behind Westlake Chemical Corp and Panasonic Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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