Correlation Between China Railway and Sekisui Chemical
Can any of the company-specific risk be diversified away by investing in both China Railway 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 China Railway and Sekisui Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Railway Construction and Sekisui Chemical Co, you can compare the effects of market volatilities on China Railway 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 China Railway with a short position of Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Sekisui Chemical.
Diversification Opportunities for China Railway and Sekisui Chemical
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Sekisui is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical and China Railway 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 China Railway Construction 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 China Railway i.e., China Railway and Sekisui Chemical go up and down completely randomly.
Pair Corralation between China Railway and Sekisui Chemical
Assuming the 90 days horizon China Railway Construction is expected to generate 2.89 times more return on investment than Sekisui Chemical. However, China Railway is 2.89 times more volatile than Sekisui Chemical Co. It trades about 0.05 of its potential returns per unit of risk. Sekisui Chemical Co is currently generating about 0.03 per unit of risk. If you would invest 31.00 in China Railway Construction on September 3, 2024 and sell it today you would earn a total of 33.00 from holding China Railway Construction or generate 106.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
China Railway Construction vs. Sekisui Chemical Co
Performance |
| Timeline |
| China Railway Constr |
| Sekisui Chemical |
China Railway and Sekisui Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Sekisui Chemical
The main advantage of trading using opposite China Railway and Sekisui Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway 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.| China Railway vs. Marie Brizard Wine | China Railway vs. IMAGIN MEDICAL INC | China Railway vs. Treasury Wine Estates | China Railway vs. NAKED WINES PLC |
| Sekisui Chemical vs. Strategic Investments AS | Sekisui Chemical vs. Japan Asia Investment | Sekisui Chemical vs. Virtus Investment Partners | Sekisui Chemical vs. United Internet AG |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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