Correlation Between Ecolab and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both Ecolab 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 Ecolab and Sanyo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Sanyo Chemical Industries, you can compare the effects of market volatilities on Ecolab 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 Ecolab with a short position of Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Sanyo Chemical.
Diversification Opportunities for Ecolab and Sanyo Chemical
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ecolab and Sanyo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc 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 Ecolab 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 Ecolab Inc 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 Ecolab i.e., Ecolab and Sanyo Chemical go up and down completely randomly.
Pair Corralation between Ecolab and Sanyo Chemical
Assuming the 90 days horizon Ecolab Inc is expected to generate 0.95 times more return on investment than Sanyo Chemical. However, Ecolab Inc is 1.06 times less risky than Sanyo Chemical. It trades about 0.09 of its potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.02 per unit of risk. If you would invest 17,453 in Ecolab Inc on September 28, 2024 and sell it today you would earn a total of 5,427 from holding Ecolab Inc or generate 31.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. Sanyo Chemical Industries
Performance |
| Timeline |
| Ecolab Inc |
| Sanyo Chemical Industries |
Ecolab and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Sanyo Chemical
The main advantage of trading using opposite Ecolab and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab 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.| Ecolab vs. Linde PLC | Ecolab vs. Air Liquide SA | Ecolab vs. The Sherwin Williams | Ecolab vs. Dupont De Nemours |
| Sanyo Chemical vs. Linde PLC | Sanyo Chemical vs. Air Liquide SA | Sanyo Chemical vs. The Sherwin Williams | Sanyo Chemical vs. Ecolab 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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