Correlation Between PKSHA TECHNOLOGY and SEKISUI CHEMICAL
Can any of the company-specific risk be diversified away by investing in both PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY and SEKISUI CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PKSHA TECHNOLOGY INC and SEKISUI CHEMICAL, you can compare the effects of market volatilities on PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY with a short position of SEKISUI CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PKSHA TECHNOLOGY and SEKISUI CHEMICAL.
Diversification Opportunities for PKSHA TECHNOLOGY and SEKISUI CHEMICAL
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PKSHA and SEKISUI is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI CHEMICAL and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC 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 PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and SEKISUI CHEMICAL go up and down completely randomly.
Pair Corralation between PKSHA TECHNOLOGY and SEKISUI CHEMICAL
Assuming the 90 days horizon PKSHA TECHNOLOGY INC is expected to generate 2.64 times more return on investment than SEKISUI CHEMICAL. However, PKSHA TECHNOLOGY is 2.64 times more volatile than SEKISUI CHEMICAL. It trades about 0.03 of its potential returns per unit of risk. SEKISUI CHEMICAL is currently generating about 0.04 per unit of risk. If you would invest 1,290 in PKSHA TECHNOLOGY INC on January 11, 2025 and sell it today you would earn a total of 240.00 from holding PKSHA TECHNOLOGY INC or generate 18.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PKSHA TECHNOLOGY INC vs. SEKISUI CHEMICAL
Performance |
| Timeline |
| PKSHA TECHNOLOGY INC |
| SEKISUI CHEMICAL |
PKSHA TECHNOLOGY and SEKISUI CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PKSHA TECHNOLOGY and SEKISUI CHEMICAL
The main advantage of trading using opposite PKSHA TECHNOLOGY and SEKISUI CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PKSHA TECHNOLOGY 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.| PKSHA TECHNOLOGY vs. Transport International Holdings | PKSHA TECHNOLOGY vs. CORNISH METALS INC | PKSHA TECHNOLOGY vs. UNITED RENTALS | PKSHA TECHNOLOGY vs. Calibre Mining Corp |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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