Correlation Between KAR Auction and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both KAR Auction and Sanyo 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 KAR Auction and Sanyo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAR Auction Services and Sanyo Chemical Industries, you can compare the effects of market volatilities on KAR Auction and Sanyo 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 KAR Auction with a short position of Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and Sanyo Chemical.
Diversification Opportunities for KAR Auction and Sanyo Chemical
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KAR and Sanyo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries and KAR Auction 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 KAR Auction Services are associated (or correlated) with Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of KAR Auction i.e., KAR Auction and Sanyo Chemical go up and down completely randomly.
Pair Corralation between KAR Auction and Sanyo Chemical
Assuming the 90 days horizon KAR Auction Services is expected to generate 1.45 times more return on investment than Sanyo Chemical. However, KAR Auction is 1.45 times more volatile than Sanyo Chemical Industries. It trades about 0.05 of its potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.02 per unit of risk. If you would invest 1,340 in KAR Auction Services on October 19, 2024 and sell it today you would earn a total of 610.00 from holding KAR Auction Services or generate 45.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAR Auction Services vs. Sanyo Chemical Industries
Performance |
| Timeline |
| KAR Auction Services |
| Sanyo Chemical Industries |
KAR Auction and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and Sanyo Chemical
The main advantage of trading using opposite KAR Auction and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction position performs unexpectedly, Sanyo 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical's long position.| KAR Auction vs. MercadoLibre | KAR Auction vs. OReilly Automotive | KAR Auction vs. AutoZone | KAR Auction vs. Tractor Supply |
| Sanyo Chemical vs. TRAVEL LEISURE DL 01 | Sanyo Chemical vs. SINGAPORE AIRLINES | Sanyo Chemical vs. PLAYWAY SA ZY 10 | Sanyo Chemical vs. Playtech plc |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |