Correlation Between Eastman Chemical and Primega Group
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Primega 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 Primega 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 Primega Group Holdings, you can compare the effects of market volatilities on Eastman Chemical and Primega 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 Primega Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Primega Group.
Diversification Opportunities for Eastman Chemical and Primega Group
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eastman and Primega is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Primega Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primega Group Holdings 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 Primega Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primega Group Holdings has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Primega Group go up and down completely randomly.
Pair Corralation between Eastman Chemical and Primega Group
Considering the 90-day investment horizon Eastman Chemical is expected to generate 90.84 times less return on investment than Primega Group. But when comparing it to its historical volatility, Eastman Chemical is 67.42 times less risky than Primega Group. It trades about 0.08 of its potential returns per unit of risk. Primega Group Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 422.00 in Primega Group Holdings on September 1, 2024 and sell it today you would lose (184.00) from holding Primega Group Holdings or give up 43.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 48.94% |
| Values | Daily Returns |
Eastman Chemical vs. Primega Group Holdings
Performance |
| Timeline |
| Eastman Chemical |
| Primega Group Holdings |
Eastman Chemical and Primega Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Primega Group
The main advantage of trading using opposite Eastman Chemical and Primega Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Primega 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 Primega Group will offset losses from the drop in Primega Group's long position.| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
| Primega Group vs. Braskem SA Class | Primega Group vs. Mativ Holdings | Primega Group vs. Eastman Chemical | Primega Group vs. Zhihu Inc ADR |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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