Correlation Between Alaska Air and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Sanyo 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 Alaska Air and Sanyo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Air Group and Sanyo Chemical Industries, you can compare the effects of market volatilities on Alaska Air and Sanyo 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 Alaska Air with a short position of Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Sanyo Chemical.
Diversification Opportunities for Alaska Air and Sanyo Chemical
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alaska and Sanyo is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries and Alaska Air 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 Alaska Air Group are associated (or correlated) with Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of Alaska Air i.e., Alaska Air and Sanyo Chemical go up and down completely randomly.
Pair Corralation between Alaska Air and Sanyo Chemical
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 1.75 times more return on investment than Sanyo Chemical. However, Alaska Air is 1.75 times more volatile than Sanyo Chemical Industries. It trades about 0.06 of its potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.01 per unit of risk. If you would invest 3,865 in Alaska Air Group on November 28, 2024 and sell it today you would earn a total of 2,923 from holding Alaska Air Group or generate 75.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Sanyo Chemical Industries
Performance |
| Timeline |
| Alaska Air Group |
| Sanyo Chemical Industries |
Alaska Air and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Sanyo Chemical
The main advantage of trading using opposite Alaska Air and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Sanyo 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical's long position.| Alaska Air vs. Cairo Communication SpA | Alaska Air vs. Laureate Education | Alaska Air vs. TELECOM ITALRISP ADR10 | Alaska Air vs. Spirent Communications plc |
| Sanyo Chemical vs. DEVRY EDUCATION GRP | Sanyo Chemical vs. HK Electric Investments | Sanyo Chemical vs. PennyMac Mortgage Investment | Sanyo Chemical vs. Adtalem Global Education |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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