Correlation Between SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4
Can any of the company-specific risk be diversified away by investing in both SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4, you can compare the effects of market volatilities on SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4.
Diversification Opportunities for SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SEKISUI and PROSIEBENSAT1 is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSIEBENSAT1 MEDIADR4 has no effect on the direction of SEKISUI CHEMICAL i.e., SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4 go up and down completely randomly.
Pair Corralation between SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4
Assuming the 90 days trading horizon SEKISUI CHEMICAL is expected to generate 0.45 times more return on investment than PROSIEBENSAT1 MEDIADR4. However, SEKISUI CHEMICAL is 2.22 times less risky than PROSIEBENSAT1 MEDIADR4. It trades about 0.03 of its potential returns per unit of risk. PROSIEBENSAT1 MEDIADR4 is currently generating about -0.02 per unit of risk. If you would invest 1,250 in SEKISUI CHEMICAL on October 25, 2024 and sell it today you would earn a total of 240.00 from holding SEKISUI CHEMICAL or generate 19.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEKISUI CHEMICAL vs. PROSIEBENSAT1 MEDIADR4
Performance |
| Timeline |
| SEKISUI CHEMICAL |
| PROSIEBENSAT1 MEDIADR4 |
SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4
The main advantage of trading using opposite SEKISUI CHEMICAL and PROSIEBENSAT1 MEDIADR4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEKISUI CHEMICAL position performs unexpectedly, PROSIEBENSAT1 MEDIADR4 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 PROSIEBENSAT1 MEDIADR4 will offset losses from the drop in PROSIEBENSAT1 MEDIADR4's long position.| SEKISUI CHEMICAL vs. AWILCO DRILLING PLC | SEKISUI CHEMICAL vs. JD SPORTS FASH | SEKISUI CHEMICAL vs. DICKS Sporting Goods | SEKISUI CHEMICAL vs. Coffee Holding Co |
| PROSIEBENSAT1 MEDIADR4 vs. Apple Inc | PROSIEBENSAT1 MEDIADR4 vs. Apple Inc | PROSIEBENSAT1 MEDIADR4 vs. Apple Inc | PROSIEBENSAT1 MEDIADR4 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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