Correlation Between UNITED UTILITIES and SEKISUI CHEMICAL
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and SEKISUI 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 UNITED UTILITIES and SEKISUI CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED UTILITIES GR and SEKISUI CHEMICAL, you can compare the effects of market volatilities on UNITED UTILITIES and SEKISUI 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 UNITED UTILITIES with a short position of SEKISUI CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and SEKISUI CHEMICAL.
Diversification Opportunities for UNITED UTILITIES and SEKISUI CHEMICAL
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UNITED and SEKISUI is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI CHEMICAL and UNITED UTILITIES 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 UNITED UTILITIES GR are associated (or correlated) with SEKISUI CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEKISUI CHEMICAL has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and SEKISUI CHEMICAL go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and SEKISUI CHEMICAL
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to under-perform the SEKISUI CHEMICAL. But the stock apears to be less risky and, when comparing its historical volatility, UNITED UTILITIES GR is 1.75 times less risky than SEKISUI CHEMICAL. The stock trades about -0.29 of its potential returns per unit of risk. The SEKISUI CHEMICAL is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,500 in SEKISUI CHEMICAL on December 1, 2024 and sell it today you would earn a total of 120.00 from holding SEKISUI CHEMICAL or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. SEKISUI CHEMICAL
Performance |
| Timeline |
| UNITED UTILITIES |
| SEKISUI CHEMICAL |
UNITED UTILITIES and SEKISUI CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and SEKISUI CHEMICAL
The main advantage of trading using opposite UNITED UTILITIES and SEKISUI CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, SEKISUI 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 SEKISUI CHEMICAL will offset losses from the drop in SEKISUI CHEMICAL's long position.| UNITED UTILITIES vs. PICKN PAY STORES | UNITED UTILITIES vs. Sunny Optical Technology | UNITED UTILITIES vs. Retail Estates NV | UNITED UTILITIES vs. X FAB Silicon Foundries |
| SEKISUI CHEMICAL vs. National Beverage Corp | SEKISUI CHEMICAL vs. SCANSOURCE | SEKISUI CHEMICAL vs. THAI BEVERAGE | SEKISUI CHEMICAL vs. PLAYSTUDIOS A DL 0001 |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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