Correlation Between SMA Solar and SEKISUI CHEMICAL
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and SEKISUI CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and SEKISUI CHEMICAL, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of SEKISUI CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and SEKISUI CHEMICAL.
Diversification Opportunities for SMA Solar and SEKISUI CHEMICAL
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SMA and SEKISUI is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI CHEMICAL and SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and SEKISUI CHEMICAL go up and down completely randomly.
Pair Corralation between SMA Solar and SEKISUI CHEMICAL
Assuming the 90 days horizon SMA Solar Technology is expected to generate 1.4 times more return on investment than SEKISUI CHEMICAL. However, SMA Solar is 1.4 times more volatile than SEKISUI CHEMICAL. It trades about 0.05 of its potential returns per unit of risk. SEKISUI CHEMICAL is currently generating about 0.06 per unit of risk. If you would invest 1,478 in SMA Solar Technology on October 13, 2024 and sell it today you would earn a total of 40.00 from holding SMA Solar Technology or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. SEKISUI CHEMICAL
Performance |
| Timeline |
| SMA Solar Technology |
| SEKISUI CHEMICAL |
SMA Solar and SEKISUI CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and SEKISUI CHEMICAL
The main advantage of trading using opposite SMA Solar and SEKISUI CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. DATAGROUP SE | SMA Solar vs. NTT DATA | SMA Solar vs. IMAGIN MEDICAL INC | SMA Solar vs. CompuGroup Medical SE |
| SEKISUI CHEMICAL vs. ADRIATIC METALS LS 013355 | SEKISUI CHEMICAL vs. Gol Intelligent Airlines | SEKISUI CHEMICAL vs. FIREWEED METALS P | SEKISUI CHEMICAL vs. Singapore Airlines Limited |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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