Correlation Between Huntsman and Kuraray
Can any of the company-specific risk be diversified away by investing in both Huntsman and Kuraray 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 Huntsman and Kuraray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntsman and Kuraray Co, you can compare the effects of market volatilities on Huntsman and Kuraray 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 Huntsman with a short position of Kuraray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntsman and Kuraray.
Diversification Opportunities for Huntsman and Kuraray
Very poor diversification
The 3 months correlation between Huntsman and Kuraray is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman and Kuraray Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuraray and Huntsman 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 Huntsman are associated (or correlated) with Kuraray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuraray has no effect on the direction of Huntsman i.e., Huntsman and Kuraray go up and down completely randomly.
Pair Corralation between Huntsman and Kuraray
Considering the 90-day investment horizon Huntsman is expected to under-perform the Kuraray. But the stock apears to be less risky and, when comparing its historical volatility, Huntsman is 1.22 times less risky than Kuraray. The stock trades about -0.05 of its potential returns per unit of risk. The Kuraray Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,467 in Kuraray Co on August 27, 2024 and sell it today you would earn a total of 1,208 from holding Kuraray Co or generate 48.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntsman vs. Kuraray Co
Performance |
| Timeline |
| Huntsman |
| Kuraray |
Huntsman and Kuraray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntsman and Kuraray
The main advantage of trading using opposite Huntsman and Kuraray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntsman position performs unexpectedly, Kuraray 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 Kuraray will offset losses from the drop in Kuraray's long position.| Huntsman vs. Valhi Inc | Huntsman vs. Lsb Industries | Huntsman vs. Westlake Chemical Partners | Huntsman vs. Braskem SA Class |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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