Correlation Between Sekisui Chemical and Cars
Can any of the company-specific risk be diversified away by investing in both Sekisui Chemical and Cars 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 Cars 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 Cars Inc, you can compare the effects of market volatilities on Sekisui Chemical and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekisui Chemical and Cars.
Diversification Opportunities for Sekisui Chemical and Cars
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sekisui and Cars is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Sekisui Chemical i.e., Sekisui Chemical and Cars go up and down completely randomly.
Pair Corralation between Sekisui Chemical and Cars
Assuming the 90 days horizon Sekisui Chemical is expected to generate 1.05 times less return on investment than Cars. But when comparing it to its historical volatility, Sekisui Chemical Co is 1.58 times less risky than Cars. It trades about 0.04 of its potential returns per unit of risk. Cars Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,430 in Cars Inc on October 11, 2024 and sell it today you would earn a total of 220.00 from holding Cars Inc or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sekisui Chemical Co vs. Cars Inc
Performance |
| Timeline |
| Sekisui Chemical |
| Cars Inc |
Sekisui Chemical and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sekisui Chemical and Cars
The main advantage of trading using opposite Sekisui Chemical and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sekisui Chemical position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Sekisui Chemical vs. H2O Retailing | Sekisui Chemical vs. Chesapeake Utilities | Sekisui Chemical vs. TAL Education Group | Sekisui Chemical vs. Grand Canyon Education |
| Cars vs. China BlueChemical | Cars vs. TIANDE CHEMICAL | Cars vs. INDO RAMA SYNTHETIC | Cars vs. Sekisui Chemical Co |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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