Correlation Between Eastman Chemical and Alpha Technology
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Alpha Technology 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 Alpha Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Alpha Technology Group, you can compare the effects of market volatilities on Eastman Chemical and Alpha Technology 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 Alpha Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Alpha Technology.
Diversification Opportunities for Eastman Chemical and Alpha Technology
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastman and Alpha is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Alpha Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Technology 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 Alpha Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Technology has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Alpha Technology go up and down completely randomly.
Pair Corralation between Eastman Chemical and Alpha Technology
Considering the 90-day investment horizon Eastman Chemical is expected to under-perform the Alpha Technology. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical is 11.28 times less risky than Alpha Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Alpha Technology Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 933.00 in Alpha Technology Group on September 13, 2024 and sell it today you would earn a total of 438.00 from holding Alpha Technology Group or generate 46.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Alpha Technology Group
Performance |
| Timeline |
| Eastman Chemical |
| Alpha Technology |
Eastman Chemical and Alpha Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Alpha Technology
The main advantage of trading using opposite Eastman Chemical and Alpha Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Alpha Technology 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 Alpha Technology will offset losses from the drop in Alpha Technology's long position.| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
| Alpha Technology vs. Assurant | Alpha Technology vs. Pekin Life Insurance | Alpha Technology vs. The Hanover Insurance | Alpha Technology vs. Teradyne |
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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