Correlation Between H2O Retailing and Sekisui Chemical
Can any of the company-specific risk be diversified away by investing in both H2O Retailing and Sekisui Chemical 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 H2O Retailing and Sekisui Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and Sekisui Chemical Co, you can compare the effects of market volatilities on H2O Retailing and Sekisui Chemical 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 H2O Retailing with a short position of Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and Sekisui Chemical.
Diversification Opportunities for H2O Retailing and Sekisui Chemical
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between H2O and Sekisui is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical and H2O Retailing 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 H2O Retailing are associated (or correlated) with Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of H2O Retailing i.e., H2O Retailing and Sekisui Chemical go up and down completely randomly.
Pair Corralation between H2O Retailing and Sekisui Chemical
Assuming the 90 days horizon H2O Retailing is expected to generate 1.59 times more return on investment than Sekisui Chemical. However, H2O Retailing is 1.59 times more volatile than Sekisui Chemical Co. It trades about 0.07 of its potential returns per unit of risk. Sekisui Chemical Co is currently generating about 0.04 per unit of risk. If you would invest 649.00 in H2O Retailing on October 11, 2024 and sell it today you would earn a total of 701.00 from holding H2O Retailing or generate 108.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H2O Retailing vs. Sekisui Chemical Co
Performance |
| Timeline |
| H2O Retailing |
| Sekisui Chemical |
H2O Retailing and Sekisui Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and Sekisui Chemical
The main advantage of trading using opposite H2O Retailing and Sekisui Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing position performs unexpectedly, Sekisui Chemical 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 Sekisui Chemical will offset losses from the drop in Sekisui Chemical's long position.| H2O Retailing vs. Thai Beverage Public | H2O Retailing vs. BJs Restaurants | H2O Retailing vs. THAI BEVERAGE | H2O Retailing vs. Luckin Coffee |
| Sekisui Chemical vs. H2O Retailing | Sekisui Chemical vs. Chesapeake Utilities | Sekisui Chemical vs. TAL Education Group | Sekisui Chemical vs. Grand Canyon Education |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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