Correlation Between CHEMICAL INDUSTRIES and H2O Retailing
Can any of the company-specific risk be diversified away by investing in both CHEMICAL INDUSTRIES and H2O Retailing 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 CHEMICAL INDUSTRIES and H2O Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHEMICAL INDUSTRIES and H2O Retailing, you can compare the effects of market volatilities on CHEMICAL INDUSTRIES and H2O Retailing 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 CHEMICAL INDUSTRIES with a short position of H2O Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEMICAL INDUSTRIES and H2O Retailing.
Diversification Opportunities for CHEMICAL INDUSTRIES and H2O Retailing
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHEMICAL and H2O is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHEMICAL INDUSTRIES and H2O Retailing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H2O Retailing and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES are associated (or correlated) with H2O Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H2O Retailing has no effect on the direction of CHEMICAL INDUSTRIES i.e., CHEMICAL INDUSTRIES and H2O Retailing go up and down completely randomly.
Pair Corralation between CHEMICAL INDUSTRIES and H2O Retailing
Assuming the 90 days trading horizon CHEMICAL INDUSTRIES is expected to generate 0.17 times more return on investment than H2O Retailing. However, CHEMICAL INDUSTRIES is 5.78 times less risky than H2O Retailing. It trades about 0.09 of its potential returns per unit of risk. H2O Retailing is currently generating about -0.04 per unit of risk. If you would invest 41.00 in CHEMICAL INDUSTRIES on October 19, 2024 and sell it today you would earn a total of 2.00 from holding CHEMICAL INDUSTRIES or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
CHEMICAL INDUSTRIES vs. H2O Retailing
Performance |
| Timeline |
| CHEMICAL INDUSTRIES |
| H2O Retailing |
CHEMICAL INDUSTRIES and H2O Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHEMICAL INDUSTRIES and H2O Retailing
The main advantage of trading using opposite CHEMICAL INDUSTRIES and H2O Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEMICAL INDUSTRIES position performs unexpectedly, H2O Retailing 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 H2O Retailing will offset losses from the drop in H2O Retailing's long position.| CHEMICAL INDUSTRIES vs. Waste Management | CHEMICAL INDUSTRIES vs. LANDSEA GREEN MANAGEMENT | CHEMICAL INDUSTRIES vs. PACIFIC ONLINE | CHEMICAL INDUSTRIES vs. Ares Management Corp |
| H2O Retailing vs. DAIRY FARM INTL | H2O Retailing vs. FARM 51 GROUP | H2O Retailing vs. MAVEN WIRELESS SWEDEN | H2O Retailing vs. Sumitomo Mitsui Construction |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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