Correlation Between Westlake Chemical and TIANDE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and TIANDE CHEMICAL 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 TIANDE CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and TIANDE CHEMICAL, you can compare the effects of market volatilities on Westlake Chemical and TIANDE CHEMICAL 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 TIANDE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and TIANDE CHEMICAL.
Diversification Opportunities for Westlake Chemical and TIANDE CHEMICAL
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westlake and TIANDE is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and TIANDE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIANDE CHEMICAL 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 TIANDE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIANDE CHEMICAL has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and TIANDE CHEMICAL go up and down completely randomly.
Pair Corralation between Westlake Chemical and TIANDE CHEMICAL
Assuming the 90 days horizon Westlake Chemical is expected to under-perform the TIANDE CHEMICAL. But the stock apears to be less risky and, when comparing its historical volatility, Westlake Chemical is 1.91 times less risky than TIANDE CHEMICAL. The stock trades about -0.06 of its potential returns per unit of risk. The TIANDE CHEMICAL is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5.25 in TIANDE CHEMICAL on September 1, 2024 and sell it today you would earn a total of 2.00 from holding TIANDE CHEMICAL or generate 38.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
Westlake Chemical vs. TIANDE CHEMICAL
Performance |
| Timeline |
| Westlake Chemical |
| TIANDE CHEMICAL |
Westlake Chemical and TIANDE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and TIANDE CHEMICAL
The main advantage of trading using opposite Westlake Chemical and TIANDE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, TIANDE CHEMICAL 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 TIANDE CHEMICAL will offset losses from the drop in TIANDE CHEMICAL's long position.| Westlake Chemical vs. PENN NATL GAMING | Westlake Chemical vs. GigaMedia | Westlake Chemical vs. HOCHSCHILD MINING | Westlake Chemical vs. TSOGO SUN GAMING |
| TIANDE CHEMICAL vs. Cal Maine Foods | TIANDE CHEMICAL vs. JJ SNACK FOODS | TIANDE CHEMICAL vs. TreeHouse Foods | TIANDE CHEMICAL vs. CN MODERN DAIRY |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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