Correlation Between Auto Trader and SEKISUI CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Auto Trader and SEKISUI 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 Auto Trader and SEKISUI CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and SEKISUI CHEMICAL, you can compare the effects of market volatilities on Auto Trader and SEKISUI 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 Auto Trader with a short position of SEKISUI CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and SEKISUI CHEMICAL.
Diversification Opportunities for Auto Trader and SEKISUI CHEMICAL
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Auto and SEKISUI is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI CHEMICAL and Auto Trader 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 Auto Trader Group are associated (or correlated) with SEKISUI CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEKISUI CHEMICAL has no effect on the direction of Auto Trader i.e., Auto Trader and SEKISUI CHEMICAL go up and down completely randomly.
Pair Corralation between Auto Trader and SEKISUI CHEMICAL
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 1.22 times more return on investment than SEKISUI CHEMICAL. However, Auto Trader is 1.22 times more volatile than SEKISUI CHEMICAL. It trades about 0.07 of its potential returns per unit of risk. SEKISUI CHEMICAL is currently generating about 0.03 per unit of risk. If you would invest 702.00 in Auto Trader Group on September 2, 2024 and sell it today you would earn a total of 308.00 from holding Auto Trader Group or generate 43.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. SEKISUI CHEMICAL
Performance |
| Timeline |
| Auto Trader Group |
| SEKISUI CHEMICAL |
Auto Trader and SEKISUI CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and SEKISUI CHEMICAL
The main advantage of trading using opposite Auto Trader and SEKISUI CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, SEKISUI 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 SEKISUI CHEMICAL will offset losses from the drop in SEKISUI CHEMICAL's long position.| Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc |
| SEKISUI CHEMICAL vs. PTT Global Chemical | SEKISUI CHEMICAL vs. Fair Isaac Corp | SEKISUI CHEMICAL vs. Norwegian Air Shuttle | SEKISUI CHEMICAL vs. DELTA AIR LINES |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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