Correlation Between GOODYEAR T and SANOK RUBBER
Can any of the company-specific risk be diversified away by investing in both GOODYEAR T and SANOK RUBBER 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 GOODYEAR T and SANOK RUBBER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODYEAR T RUBBER and SANOK RUBBER ZY, you can compare the effects of market volatilities on GOODYEAR T and SANOK RUBBER 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 GOODYEAR T with a short position of SANOK RUBBER. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and SANOK RUBBER.
Diversification Opportunities for GOODYEAR T and SANOK RUBBER
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GOODYEAR and SANOK is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY and GOODYEAR T 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 GOODYEAR T RUBBER are associated (or correlated) with SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of GOODYEAR T i.e., GOODYEAR T and SANOK RUBBER go up and down completely randomly.
Pair Corralation between GOODYEAR T and SANOK RUBBER
Assuming the 90 days trading horizon GOODYEAR T RUBBER is expected to under-perform the SANOK RUBBER. But the stock apears to be less risky and, when comparing its historical volatility, GOODYEAR T RUBBER is 1.01 times less risky than SANOK RUBBER. The stock trades about -0.02 of its potential returns per unit of risk. The SANOK RUBBER ZY is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 338.00 in SANOK RUBBER ZY on August 29, 2024 and sell it today you would earn a total of 96.00 from holding SANOK RUBBER ZY or generate 28.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOODYEAR T RUBBER vs. SANOK RUBBER ZY
Performance |
| Timeline |
| GOODYEAR T RUBBER |
| SANOK RUBBER ZY |
GOODYEAR T and SANOK RUBBER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOODYEAR T and SANOK RUBBER
The main advantage of trading using opposite GOODYEAR T and SANOK RUBBER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T position performs unexpectedly, SANOK RUBBER 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 SANOK RUBBER will offset losses from the drop in SANOK RUBBER's long position.| GOODYEAR T vs. Apple Inc | GOODYEAR T vs. Apple Inc | GOODYEAR T vs. Superior Plus Corp | GOODYEAR T vs. SIVERS SEMICONDUCTORS AB |
| SANOK RUBBER vs. PT Astra International | SANOK RUBBER vs. Continental Aktiengesellschaft | SANOK RUBBER vs. Superior Plus Corp | SANOK RUBBER vs. NMI Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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