Correlation Between Sekisui Chemical and Novanta
Can any of the company-specific risk be diversified away by investing in both Sekisui Chemical and Novanta 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 Novanta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sekisui Chemical Co and Novanta, you can compare the effects of market volatilities on Sekisui Chemical and Novanta 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 Novanta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekisui Chemical and Novanta.
Diversification Opportunities for Sekisui Chemical and Novanta
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sekisui and Novanta is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and Novanta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novanta 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 Co are associated (or correlated) with Novanta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novanta has no effect on the direction of Sekisui Chemical i.e., Sekisui Chemical and Novanta go up and down completely randomly.
Pair Corralation between Sekisui Chemical and Novanta
Assuming the 90 days horizon Sekisui Chemical Co is expected to generate 1.05 times more return on investment than Novanta. However, Sekisui Chemical is 1.05 times more volatile than Novanta. It trades about 0.27 of its potential returns per unit of risk. Novanta is currently generating about -0.03 per unit of risk. If you would invest 1,290 in Sekisui Chemical Co on September 1, 2024 and sell it today you would earn a total of 210.00 from holding Sekisui Chemical Co or generate 16.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sekisui Chemical Co vs. Novanta
Performance |
| Timeline |
| Sekisui Chemical |
| Novanta |
Sekisui Chemical and Novanta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sekisui Chemical and Novanta
The main advantage of trading using opposite Sekisui Chemical and Novanta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sekisui Chemical position performs unexpectedly, Novanta 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 Novanta will offset losses from the drop in Novanta's long position.| Sekisui Chemical vs. CECO ENVIRONMENTAL | Sekisui Chemical vs. United States Steel | Sekisui Chemical vs. WESTLAKE CHEMICAL | Sekisui Chemical vs. Silicon Motion Technology |
| Novanta vs. TROPHY GAMES DEV | Novanta vs. ScanSource | Novanta vs. GigaMedia | Novanta vs. FRACTAL GAMING GROUP |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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