Correlation Between Methanex and Kuraray
Can any of the company-specific risk be diversified away by investing in both Methanex 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 Methanex and Kuraray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methanex and Kuraray Co, you can compare the effects of market volatilities on Methanex 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 Methanex with a short position of Kuraray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methanex and Kuraray.
Diversification Opportunities for Methanex and Kuraray
Very good diversification
The 3 months correlation between Methanex and Kuraray is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Methanex and Kuraray Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuraray and Methanex 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 Methanex 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 Methanex i.e., Methanex and Kuraray go up and down completely randomly.
Pair Corralation between Methanex and Kuraray
Given the investment horizon of 90 days Methanex is expected to under-perform the Kuraray. But the stock apears to be less risky and, when comparing its historical volatility, Methanex is 1.14 times less risky than Kuraray. The stock trades about -0.02 of its potential returns per unit of risk. The Kuraray Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,755 in Kuraray Co on September 1, 2024 and sell it today you would lose (80.00) from holding Kuraray Co or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methanex vs. Kuraray Co
Performance |
| Timeline |
| Methanex |
| Kuraray |
Methanex and Kuraray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methanex and Kuraray
The main advantage of trading using opposite Methanex and Kuraray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methanex 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.| Methanex vs. AdvanSix | Methanex vs. Lsb Industries | Methanex vs. Green Plains Renewable | Methanex vs. Tronox Holdings PLC |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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