Correlation Between Citic and Sekisui Chemical
Can any of the company-specific risk be diversified away by investing in both Citic 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 Citic and Sekisui Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citic Ltd ADR and Sekisui Chemical Co, you can compare the effects of market volatilities on Citic 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 Citic with a short position of Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic and Sekisui Chemical.
Diversification Opportunities for Citic and Sekisui Chemical
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citic and Sekisui is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citic Ltd ADR and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical and Citic 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 Citic Ltd ADR 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 Citic i.e., Citic and Sekisui Chemical go up and down completely randomly.
Pair Corralation between Citic and Sekisui Chemical
Assuming the 90 days horizon Citic Ltd ADR is expected to generate 6.64 times more return on investment than Sekisui Chemical. However, Citic is 6.64 times more volatile than Sekisui Chemical Co. It trades about 0.07 of its potential returns per unit of risk. Sekisui Chemical Co is currently generating about 0.11 per unit of risk. If you would invest 481.00 in Citic Ltd ADR on September 3, 2024 and sell it today you would earn a total of 126.00 from holding Citic Ltd ADR or generate 26.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.6% |
| Values | Daily Returns |
Citic Ltd ADR vs. Sekisui Chemical Co
Performance |
| Timeline |
| Citic Ltd ADR |
| Sekisui Chemical |
Citic and Sekisui Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic and Sekisui Chemical
The main advantage of trading using opposite Citic and Sekisui Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic 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.| Citic vs. Honeywell International | Citic vs. MDU Resources Group | Citic vs. Compass Diversified Holdings | Citic vs. Valmont Industries |
| Sekisui Chemical vs. Grupo Bimbo SAB | Sekisui Chemical vs. Grupo Financiero Inbursa | Sekisui Chemical vs. Becle SA de | Sekisui Chemical vs. HUMANA INC |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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