Correlation Between Eternal Materials and Shiny Chemical
Can any of the company-specific risk be diversified away by investing in both Eternal Materials and Shiny Chemical 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 Eternal Materials and Shiny Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eternal Materials Co and Shiny Chemical Industrial, you can compare the effects of market volatilities on Eternal Materials and Shiny Chemical 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 Eternal Materials with a short position of Shiny Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternal Materials and Shiny Chemical.
Diversification Opportunities for Eternal Materials and Shiny Chemical
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eternal and Shiny is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Eternal Materials Co and Shiny Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shiny Chemical Industrial and Eternal Materials 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 Eternal Materials Co are associated (or correlated) with Shiny Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shiny Chemical Industrial has no effect on the direction of Eternal Materials i.e., Eternal Materials and Shiny Chemical go up and down completely randomly.
Pair Corralation between Eternal Materials and Shiny Chemical
Assuming the 90 days trading horizon Eternal Materials Co is expected to generate 0.56 times more return on investment than Shiny Chemical. However, Eternal Materials Co is 1.8 times less risky than Shiny Chemical. It trades about 0.0 of its potential returns per unit of risk. Shiny Chemical Industrial is currently generating about -0.07 per unit of risk. If you would invest 2,805 in Eternal Materials Co on October 23, 2024 and sell it today you would lose (5.00) from holding Eternal Materials Co or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eternal Materials Co vs. Shiny Chemical Industrial
Performance |
| Timeline |
| Eternal Materials |
| Shiny Chemical Industrial |
Eternal Materials and Shiny Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eternal Materials and Shiny Chemical
The main advantage of trading using opposite Eternal Materials and Shiny Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eternal Materials position performs unexpectedly, Shiny Chemical 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 Shiny Chemical will offset losses from the drop in Shiny Chemical's long position.| Eternal Materials vs. Cathay Real Estate | Eternal Materials vs. Huaku Development Co | Eternal Materials vs. BES Engineering Co | Eternal Materials vs. Prince Housing Development |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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