Correlation Between Ceres Power and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Ceres Power 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 Ceres Power and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ceres Power Holdings and Eastman Chemical Co, you can compare the effects of market volatilities on Ceres Power 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 Ceres Power with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceres Power and Eastman Chemical.
Diversification Opportunities for Ceres Power and Eastman Chemical
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ceres and Eastman is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ceres Power Holdings and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Ceres Power 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 Ceres Power Holdings 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 Ceres Power i.e., Ceres Power and Eastman Chemical go up and down completely randomly.
Pair Corralation between Ceres Power and Eastman Chemical
Assuming the 90 days trading horizon Ceres Power Holdings is expected to under-perform the Eastman Chemical. In addition to that, Ceres Power is 2.62 times more volatile than Eastman Chemical Co. It trades about -0.01 of its total potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.04 per unit of volatility. If you would invest 7,949 in Eastman Chemical Co on September 1, 2024 and sell it today you would earn a total of 2,523 from holding Eastman Chemical Co or generate 31.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.78% |
| Values | Daily Returns |
Ceres Power Holdings vs. Eastman Chemical Co
Performance |
| Timeline |
| Ceres Power Holdings |
| Eastman Chemical |
Ceres Power and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ceres Power and Eastman Chemical
The main advantage of trading using opposite Ceres Power and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceres Power 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.| Ceres Power vs. Datagroup SE | Ceres Power vs. Eastman Chemical Co | Ceres Power vs. Ion Beam Applications | Ceres Power vs. Automatic Data Processing |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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