Correlation Between Eastman Chemical and Sociedad Quimica
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Sociedad Quimica 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 Sociedad Quimica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Sociedad Quimica y, you can compare the effects of market volatilities on Eastman Chemical and Sociedad Quimica 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 Sociedad Quimica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Sociedad Quimica.
Diversification Opportunities for Eastman Chemical and Sociedad Quimica
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastman and Sociedad is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Sociedad Quimica y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Quimica y 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 Sociedad Quimica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Quimica y has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Sociedad Quimica go up and down completely randomly.
Pair Corralation between Eastman Chemical and Sociedad Quimica
Considering the 90-day investment horizon Eastman Chemical is expected to under-perform the Sociedad Quimica. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical is 1.43 times less risky than Sociedad Quimica. The stock trades about -0.01 of its potential returns per unit of risk. The Sociedad Quimica y is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,868 in Sociedad Quimica y on August 31, 2024 and sell it today you would lose (12.00) from holding Sociedad Quimica y or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Sociedad Quimica y
Performance |
| Timeline |
| Eastman Chemical |
| Sociedad Quimica y |
Eastman Chemical and Sociedad Quimica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Sociedad Quimica
The main advantage of trading using opposite Eastman Chemical and Sociedad Quimica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Sociedad Quimica 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 Sociedad Quimica will offset losses from the drop in Sociedad Quimica's long position.| Eastman Chemical vs. Air Products and | Eastman Chemical vs. International Flavors Fragrances | Eastman Chemical vs. Sherwin Williams Co | Eastman Chemical vs. PPG Industries |
| Sociedad Quimica vs. Linde plc Ordinary | Sociedad Quimica vs. Air Products and | Sociedad Quimica vs. Sherwin Williams Co | Sociedad Quimica vs. Albemarle Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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