Correlation Between Westlake Chemical and SOFTBANK CORP
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and SOFTBANK CORP 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 Westlake Chemical and SOFTBANK CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and SOFTBANK P ADR, you can compare the effects of market volatilities on Westlake Chemical and SOFTBANK CORP 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 Westlake Chemical with a short position of SOFTBANK CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and SOFTBANK CORP.
Diversification Opportunities for Westlake Chemical and SOFTBANK CORP
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westlake and SOFTBANK is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and SOFTBANK P ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTBANK P ADR and Westlake 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 Westlake Chemical are associated (or correlated) with SOFTBANK CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTBANK P ADR has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and SOFTBANK CORP go up and down completely randomly.
Pair Corralation between Westlake Chemical and SOFTBANK CORP
Assuming the 90 days horizon Westlake Chemical is expected to generate 4.1 times less return on investment than SOFTBANK CORP. But when comparing it to its historical volatility, Westlake Chemical is 2.84 times less risky than SOFTBANK CORP. It trades about 0.06 of its potential returns per unit of risk. SOFTBANK P ADR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,050 in SOFTBANK P ADR on September 4, 2024 and sell it today you would earn a total of 80.00 from holding SOFTBANK P ADR or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical vs. SOFTBANK P ADR
Performance |
| Timeline |
| Westlake Chemical |
| SOFTBANK P ADR |
Westlake Chemical and SOFTBANK CORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and SOFTBANK CORP
The main advantage of trading using opposite Westlake Chemical and SOFTBANK CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, SOFTBANK CORP 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 SOFTBANK CORP will offset losses from the drop in SOFTBANK CORP's long position.| Westlake Chemical vs. The Sherwin Williams | Westlake Chemical vs. Dupont De Nemours | Westlake Chemical vs. Superior Plus Corp | Westlake Chemical vs. NMI Holdings |
| SOFTBANK CORP vs. Siamgas And Petrochemicals | SOFTBANK CORP vs. Lion One Metals | SOFTBANK CORP vs. PTT Global Chemical | SOFTBANK CORP vs. Westlake Chemical |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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