Correlation Between NISSAN CHEMICAL and WESTLAKE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL and WESTLAKE 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 NISSAN CHEMICAL and WESTLAKE CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NISSAN CHEMICAL IND and WESTLAKE CHEMICAL, you can compare the effects of market volatilities on NISSAN CHEMICAL and WESTLAKE 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 NISSAN CHEMICAL with a short position of WESTLAKE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and WESTLAKE CHEMICAL.
Diversification Opportunities for NISSAN CHEMICAL and WESTLAKE CHEMICAL
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NISSAN and WESTLAKE is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and WESTLAKE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLAKE CHEMICAL and NISSAN CHEMICAL 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 NISSAN CHEMICAL IND are associated (or correlated) with WESTLAKE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTLAKE CHEMICAL has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and WESTLAKE CHEMICAL go up and down completely randomly.
Pair Corralation between NISSAN CHEMICAL and WESTLAKE CHEMICAL
Assuming the 90 days trading horizon NISSAN CHEMICAL IND is expected to under-perform the WESTLAKE CHEMICAL. But the stock apears to be less risky and, when comparing its historical volatility, NISSAN CHEMICAL IND is 1.02 times less risky than WESTLAKE CHEMICAL. The stock trades about -0.03 of its potential returns per unit of risk. The WESTLAKE CHEMICAL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,935 in WESTLAKE CHEMICAL on August 25, 2024 and sell it today you would earn a total of 2,365 from holding WESTLAKE CHEMICAL or generate 23.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NISSAN CHEMICAL IND vs. WESTLAKE CHEMICAL
Performance |
| Timeline |
| NISSAN CHEMICAL IND |
| WESTLAKE CHEMICAL |
NISSAN CHEMICAL and WESTLAKE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NISSAN CHEMICAL and WESTLAKE CHEMICAL
The main advantage of trading using opposite NISSAN CHEMICAL and WESTLAKE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSAN CHEMICAL position performs unexpectedly, WESTLAKE 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 WESTLAKE CHEMICAL will offset losses from the drop in WESTLAKE CHEMICAL's long position.| NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc |
| WESTLAKE CHEMICAL vs. Apple Inc | WESTLAKE CHEMICAL vs. Apple Inc | WESTLAKE CHEMICAL vs. Apple Inc | WESTLAKE CHEMICAL vs. Apple Inc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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