Correlation Between Idemitsu Kosan and Eneos Holdings
Can any of the company-specific risk be diversified away by investing in both Idemitsu Kosan and Eneos Holdings 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 Idemitsu Kosan and Eneos Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Idemitsu Kosan Co and Eneos Holdings ADR, you can compare the effects of market volatilities on Idemitsu Kosan and Eneos Holdings 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 Idemitsu Kosan with a short position of Eneos Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Idemitsu Kosan and Eneos Holdings.
Diversification Opportunities for Idemitsu Kosan and Eneos Holdings
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Idemitsu and Eneos is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Idemitsu Kosan Co and Eneos Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneos Holdings ADR and Idemitsu Kosan 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 Idemitsu Kosan Co are associated (or correlated) with Eneos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneos Holdings ADR has no effect on the direction of Idemitsu Kosan i.e., Idemitsu Kosan and Eneos Holdings go up and down completely randomly.
Pair Corralation between Idemitsu Kosan and Eneos Holdings
Assuming the 90 days horizon Idemitsu Kosan Co is expected to under-perform the Eneos Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Idemitsu Kosan Co is 1.54 times less risky than Eneos Holdings. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Eneos Holdings ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,012 in Eneos Holdings ADR on August 31, 2024 and sell it today you would lose (5.00) from holding Eneos Holdings ADR or give up 0.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Idemitsu Kosan Co vs. Eneos Holdings ADR
Performance |
| Timeline |
| Idemitsu Kosan |
| Eneos Holdings ADR |
Idemitsu Kosan and Eneos Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Idemitsu Kosan and Eneos Holdings
The main advantage of trading using opposite Idemitsu Kosan and Eneos Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Idemitsu Kosan position performs unexpectedly, Eneos Holdings 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 Eneos Holdings will offset losses from the drop in Eneos Holdings' long position.| Idemitsu Kosan vs. CVR Energy | Idemitsu Kosan vs. Valero Energy | Idemitsu Kosan vs. Phillips 66 | Idemitsu Kosan vs. Marathon Petroleum Corp |
| Eneos Holdings vs. CVR Energy | Eneos Holdings vs. Valero Energy | Eneos Holdings vs. Phillips 66 | Eneos Holdings vs. Marathon Petroleum 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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