Correlation Between Styrenix Performance and DMCC SPECIALITY
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By analyzing existing cross correlation between Styrenix Performance Materials and DMCC SPECIALITY CHEMICALS, you can compare the effects of market volatilities on Styrenix Performance and DMCC SPECIALITY 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 Styrenix Performance with a short position of DMCC SPECIALITY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Styrenix Performance and DMCC SPECIALITY.
Diversification Opportunities for Styrenix Performance and DMCC SPECIALITY
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Styrenix and DMCC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Styrenix Performance Materials and DMCC SPECIALITY CHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DMCC SPECIALITY CHEMICALS and Styrenix Performance 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 Styrenix Performance Materials are associated (or correlated) with DMCC SPECIALITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DMCC SPECIALITY CHEMICALS has no effect on the direction of Styrenix Performance i.e., Styrenix Performance and DMCC SPECIALITY go up and down completely randomly.
Pair Corralation between Styrenix Performance and DMCC SPECIALITY
Assuming the 90 days trading horizon Styrenix Performance Materials is expected to under-perform the DMCC SPECIALITY. But the stock apears to be less risky and, when comparing its historical volatility, Styrenix Performance Materials is 1.42 times less risky than DMCC SPECIALITY. The stock trades about -0.31 of its potential returns per unit of risk. The DMCC SPECIALITY CHEMICALS is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 35,880 in DMCC SPECIALITY CHEMICALS on November 5, 2024 and sell it today you would lose (4,095) from holding DMCC SPECIALITY CHEMICALS or give up 11.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Styrenix Performance Materials vs. DMCC SPECIALITY CHEMICALS
Performance |
| Timeline |
| Styrenix Performance |
| DMCC SPECIALITY CHEMICALS |
Styrenix Performance and DMCC SPECIALITY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Styrenix Performance and DMCC SPECIALITY
The main advantage of trading using opposite Styrenix Performance and DMCC SPECIALITY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Styrenix Performance position performs unexpectedly, DMCC SPECIALITY 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 DMCC SPECIALITY will offset losses from the drop in DMCC SPECIALITY's long position.The idea behind Styrenix Performance Materials and DMCC SPECIALITY CHEMICALS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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