Correlation Between SEKISUI CHEMICAL and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both SEKISUI CHEMICAL and Lamar Advertising 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 SEKISUI CHEMICAL and Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEKISUI CHEMICAL and Lamar Advertising, you can compare the effects of market volatilities on SEKISUI CHEMICAL and Lamar Advertising 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 SEKISUI CHEMICAL with a short position of Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEKISUI CHEMICAL and Lamar Advertising.
Diversification Opportunities for SEKISUI CHEMICAL and Lamar Advertising
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SEKISUI and Lamar is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding SEKISUI CHEMICAL and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising and SEKISUI 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 SEKISUI CHEMICAL are associated (or correlated) with Lamar Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamar Advertising has no effect on the direction of SEKISUI CHEMICAL i.e., SEKISUI CHEMICAL and Lamar Advertising go up and down completely randomly.
Pair Corralation between SEKISUI CHEMICAL and Lamar Advertising
Assuming the 90 days trading horizon SEKISUI CHEMICAL is expected to generate 1.81 times less return on investment than Lamar Advertising. But when comparing it to its historical volatility, SEKISUI CHEMICAL is 1.06 times less risky than Lamar Advertising. It trades about 0.03 of its potential returns per unit of risk. Lamar Advertising is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,228 in Lamar Advertising on October 12, 2024 and sell it today you would earn a total of 3,272 from holding Lamar Advertising or generate 39.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEKISUI CHEMICAL vs. Lamar Advertising
Performance |
| Timeline |
| SEKISUI CHEMICAL |
| Lamar Advertising |
SEKISUI CHEMICAL and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEKISUI CHEMICAL and Lamar Advertising
The main advantage of trading using opposite SEKISUI CHEMICAL and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEKISUI CHEMICAL position performs unexpectedly, Lamar Advertising 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 Lamar Advertising will offset losses from the drop in Lamar Advertising's long position.| 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 |
| Lamar Advertising vs. Siamgas And Petrochemicals | Lamar Advertising vs. TIANDE CHEMICAL | Lamar Advertising vs. SEKISUI CHEMICAL | Lamar Advertising vs. Highlight Communications AG |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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