Correlation Between ADRIATIC METALS and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and Eastman 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 ADRIATIC METALS and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADRIATIC METALS LS 013355 and Eastman Chemical, you can compare the effects of market volatilities on ADRIATIC METALS and Eastman 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 ADRIATIC METALS with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and Eastman Chemical.
Diversification Opportunities for ADRIATIC METALS and Eastman Chemical
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ADRIATIC and Eastman is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and ADRIATIC METALS 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 ADRIATIC METALS LS 013355 are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and Eastman Chemical go up and down completely randomly.
Pair Corralation between ADRIATIC METALS and Eastman Chemical
Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 2.2 times more return on investment than Eastman Chemical. However, ADRIATIC METALS is 2.2 times more volatile than Eastman Chemical. It trades about 0.03 of its potential returns per unit of risk. Eastman Chemical is currently generating about 0.04 per unit of risk. If you would invest 189.00 in ADRIATIC METALS LS 013355 on September 3, 2024 and sell it today you would earn a total of 57.00 from holding ADRIATIC METALS LS 013355 or generate 30.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADRIATIC METALS LS 013355 vs. Eastman Chemical
Performance |
| Timeline |
| ADRIATIC METALS LS |
| Eastman Chemical |
ADRIATIC METALS and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADRIATIC METALS and Eastman Chemical
The main advantage of trading using opposite ADRIATIC METALS and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRIATIC METALS position performs unexpectedly, Eastman 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| ADRIATIC METALS vs. MOLSON RS BEVERAGE | ADRIATIC METALS vs. China Resources Beer | ADRIATIC METALS vs. Suntory Beverage Food | ADRIATIC METALS vs. Fevertree Drinks PLC |
| Eastman Chemical vs. Vulcan Materials | Eastman Chemical vs. Broadwind | Eastman Chemical vs. Transportadora de Gas | Eastman Chemical vs. URBAN OUTFITTERS |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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