Correlation Between Standard Chemical and Maywufa
Can any of the company-specific risk be diversified away by investing in both Standard Chemical and Maywufa 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 Standard Chemical and Maywufa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Chemical Pharmaceutical and Maywufa Co, you can compare the effects of market volatilities on Standard Chemical and Maywufa 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 Standard Chemical with a short position of Maywufa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Chemical and Maywufa.
Diversification Opportunities for Standard Chemical and Maywufa
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Standard and Maywufa is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Standard Chemical Pharmaceutic and Maywufa Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maywufa and Standard 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 Standard Chemical Pharmaceutical are associated (or correlated) with Maywufa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maywufa has no effect on the direction of Standard Chemical i.e., Standard Chemical and Maywufa go up and down completely randomly.
Pair Corralation between Standard Chemical and Maywufa
Assuming the 90 days trading horizon Standard Chemical Pharmaceutical is expected to under-perform the Maywufa. In addition to that, Standard Chemical is 1.01 times more volatile than Maywufa Co. It trades about -0.06 of its total potential returns per unit of risk. Maywufa Co is currently generating about -0.03 per unit of volatility. If you would invest 2,300 in Maywufa Co on November 5, 2024 and sell it today you would lose (5.00) from holding Maywufa Co or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Chemical Pharmaceutic vs. Maywufa Co
Performance |
| Timeline |
| Standard Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Maywufa |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Standard Chemical and Maywufa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Chemical and Maywufa
The main advantage of trading using opposite Standard Chemical and Maywufa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Chemical position performs unexpectedly, Maywufa 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 Maywufa will offset losses from the drop in Maywufa's long position.The idea behind Standard Chemical Pharmaceutical and Maywufa Co 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.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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