Correlation Between Eastman Chemical and SolarWorld Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and SolarWorld Aktiengesellscha 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 SolarWorld Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and SolarWorld Aktiengesellschaft, you can compare the effects of market volatilities on Eastman Chemical and SolarWorld Aktiengesellscha 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 SolarWorld Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and SolarWorld Aktiengesellscha.
Diversification Opportunities for Eastman Chemical and SolarWorld Aktiengesellscha
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastman and SolarWorld is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and SolarWorld Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarWorld Aktiengesellscha 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 SolarWorld Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarWorld Aktiengesellscha has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and SolarWorld Aktiengesellscha go up and down completely randomly.
Pair Corralation between Eastman Chemical and SolarWorld Aktiengesellscha
Considering the 90-day investment horizon Eastman Chemical is expected to generate 38.91 times less return on investment than SolarWorld Aktiengesellscha. But when comparing it to its historical volatility, Eastman Chemical is 46.92 times less risky than SolarWorld Aktiengesellscha. It trades about 0.07 of its potential returns per unit of risk. SolarWorld Aktiengesellschaft is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 20.00 in SolarWorld Aktiengesellschaft on September 14, 2024 and sell it today you would lose (19.92) from holding SolarWorld Aktiengesellschaft or give up 99.6% 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. SolarWorld Aktiengesellschaft
Performance |
| Timeline |
| Eastman Chemical |
| SolarWorld Aktiengesellscha |
Eastman Chemical and SolarWorld Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and SolarWorld Aktiengesellscha
The main advantage of trading using opposite Eastman Chemical and SolarWorld Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, SolarWorld Aktiengesellscha 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 SolarWorld Aktiengesellscha will offset losses from the drop in SolarWorld Aktiengesellscha's long position.| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
| SolarWorld Aktiengesellscha vs. Origin Materials | SolarWorld Aktiengesellscha vs. Eastman Chemical | SolarWorld Aktiengesellscha vs. Park Electrochemical | SolarWorld Aktiengesellscha vs. Allient |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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