Correlation Between Eastman Chemical and Sony Group
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Sony Group 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 Eastman Chemical and Sony Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Sony Group, you can compare the effects of market volatilities on Eastman Chemical and Sony Group 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 Eastman Chemical with a short position of Sony Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Sony Group.
Diversification Opportunities for Eastman Chemical and Sony Group
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eastman and Sony is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Sony Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group and Eastman Chemical 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 Eastman Chemical are associated (or correlated) with Sony Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Sony Group go up and down completely randomly.
Pair Corralation between Eastman Chemical and Sony Group
Assuming the 90 days horizon Eastman Chemical is expected to generate 5.32 times less return on investment than Sony Group. But when comparing it to its historical volatility, Eastman Chemical is 2.01 times less risky than Sony Group. It trades about 0.04 of its potential returns per unit of risk. Sony Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,674 in Sony Group on December 4, 2024 and sell it today you would earn a total of 666.00 from holding Sony Group or generate 39.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Sony Group
Performance |
| Timeline |
| Eastman Chemical |
| Sony Group |
Eastman Chemical and Sony Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Sony Group
The main advantage of trading using opposite Eastman Chemical and Sony Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Sony Group 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 Sony Group will offset losses from the drop in Sony Group's long position.| Eastman Chemical vs. NORTHEAST UTILITIES | Eastman Chemical vs. NH HOTEL GROUP | Eastman Chemical vs. Xenia Hotels Resorts | Eastman Chemical vs. MIRAMAR HOTEL INV |
| Sony Group vs. Agricultural Bank of | Sony Group vs. North American Construction | Sony Group vs. RYU Apparel | Sony Group vs. Titan Machinery |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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