Correlation Between SEKISUI CHEMICAL and China Pacific
Can any of the company-specific risk be diversified away by investing in both SEKISUI CHEMICAL and China Pacific 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 China Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEKISUI CHEMICAL and China Pacific Insurance, you can compare the effects of market volatilities on SEKISUI CHEMICAL and China Pacific 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 China Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEKISUI CHEMICAL and China Pacific.
Diversification Opportunities for SEKISUI CHEMICAL and China Pacific
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between SEKISUI and China is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SEKISUI CHEMICAL and China Pacific Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pacific Insurance 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 China Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pacific Insurance has no effect on the direction of SEKISUI CHEMICAL i.e., SEKISUI CHEMICAL and China Pacific go up and down completely randomly.
Pair Corralation between SEKISUI CHEMICAL and China Pacific
Assuming the 90 days trading horizon SEKISUI CHEMICAL is expected to generate 10.54 times less return on investment than China Pacific. But when comparing it to its historical volatility, SEKISUI CHEMICAL is 4.27 times less risky than China Pacific. It trades about 0.03 of its potential returns per unit of risk. China Pacific Insurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 68.00 in China Pacific Insurance on September 3, 2024 and sell it today you would earn a total of 226.00 from holding China Pacific Insurance or generate 332.35% 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. China Pacific Insurance
Performance |
| Timeline |
| SEKISUI CHEMICAL |
| China Pacific Insurance |
SEKISUI CHEMICAL and China Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEKISUI CHEMICAL and China Pacific
The main advantage of trading using opposite SEKISUI CHEMICAL and China Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEKISUI CHEMICAL position performs unexpectedly, China Pacific 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 China Pacific will offset losses from the drop in China Pacific's long position.| SEKISUI CHEMICAL vs. TOTAL GABON | SEKISUI CHEMICAL vs. Walgreens Boots Alliance | SEKISUI CHEMICAL vs. Peak Resources Limited |
| China Pacific vs. Ping An Insurance | China Pacific vs. China Life Insurance | China Pacific vs. Superior Plus Corp | China Pacific vs. Origin Agritech |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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