Correlation Between Eastman Chemical and Sika AG
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Sika AG 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 Sika AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Sika AG, you can compare the effects of market volatilities on Eastman Chemical and Sika AG 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 Sika AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Sika AG.
Diversification Opportunities for Eastman Chemical and Sika AG
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eastman and Sika is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Sika AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG 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 Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Sika AG go up and down completely randomly.
Pair Corralation between Eastman Chemical and Sika AG
Considering the 90-day investment horizon Eastman Chemical is expected to generate 0.6 times more return on investment than Sika AG. However, Eastman Chemical is 1.67 times less risky than Sika AG. It trades about 0.07 of its potential returns per unit of risk. Sika AG is currently generating about 0.01 per unit of risk. If you would invest 7,627 in Eastman Chemical on September 1, 2024 and sell it today you would earn a total of 2,845 from holding Eastman Chemical or generate 37.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Sika AG
Performance |
| Timeline |
| Eastman Chemical |
| Sika AG |
Eastman Chemical and Sika AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Sika AG
The main advantage of trading using opposite Eastman Chemical and Sika AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Sika AG 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 Sika AG will offset losses from the drop in Sika AG's long position.| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
| Sika AG vs. Sherwin Williams Co | Sika AG vs. Air Liquide SA | Sika AG vs. LAir Liquide SA | Sika AG vs. Air Products and |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |