Correlation Between Sekisui Chemical and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Sekisui Chemical and Thyssenkrupp 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 Thyssenkrupp 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 thyssenkrupp AG, you can compare the effects of market volatilities on Sekisui Chemical and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekisui Chemical and Thyssenkrupp.
Diversification Opportunities for Sekisui Chemical and Thyssenkrupp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sekisui and Thyssenkrupp is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of Sekisui Chemical i.e., Sekisui Chemical and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Sekisui Chemical and Thyssenkrupp
Assuming the 90 days horizon Sekisui Chemical Co is expected to under-perform the Thyssenkrupp. But the stock apears to be less risky and, when comparing its historical volatility, Sekisui Chemical Co is 2.05 times less risky than Thyssenkrupp. The stock trades about -0.3 of its potential returns per unit of risk. The thyssenkrupp AG is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 382.00 in thyssenkrupp AG on October 29, 2024 and sell it today you would earn a total of 44.00 from holding thyssenkrupp AG or generate 11.52% 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. thyssenkrupp AG
Performance |
| Timeline |
| Sekisui Chemical |
| thyssenkrupp AG |
Sekisui Chemical and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sekisui Chemical and Thyssenkrupp
The main advantage of trading using opposite Sekisui Chemical and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sekisui Chemical position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| Sekisui Chemical vs. FAST RETAIL ADR | Sekisui Chemical vs. GAMESTOP | Sekisui Chemical vs. BURLINGTON STORES | Sekisui Chemical vs. GameStop Corp |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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