Correlation Between Sanyo Chemical and BP Plc
Can any of the company-specific risk be diversified away by investing in both Sanyo Chemical and BP Plc 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 Sanyo Chemical and BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanyo Chemical Industries and BP plc, you can compare the effects of market volatilities on Sanyo Chemical and BP Plc 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 Sanyo Chemical with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and BP Plc.
Diversification Opportunities for Sanyo Chemical and BP Plc
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sanyo and BSU is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc and Sanyo 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 Sanyo Chemical Industries are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and BP Plc go up and down completely randomly.
Pair Corralation between Sanyo Chemical and BP Plc
Assuming the 90 days horizon Sanyo Chemical is expected to generate 63.59 times less return on investment than BP Plc. But when comparing it to its historical volatility, Sanyo Chemical Industries is 1.85 times less risky than BP Plc. It trades about 0.0 of its potential returns per unit of risk. BP plc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,634 in BP plc on September 4, 2024 and sell it today you would earn a total of 126.00 from holding BP plc or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sanyo Chemical Industries vs. BP plc
Performance |
| Timeline |
| Sanyo Chemical Industries |
| BP plc |
Sanyo Chemical and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Chemical and BP Plc
The main advantage of trading using opposite Sanyo Chemical and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Chemical position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| Sanyo Chemical vs. The Sherwin Williams | Sanyo Chemical vs. Dupont De Nemours | Sanyo Chemical vs. Superior Plus Corp | Sanyo Chemical vs. NMI Holdings |
| BP Plc vs. FANDIFI TECHNOLOGY P | BP Plc vs. Sunny Optical Technology | BP Plc vs. Sanyo Chemical Industries | BP Plc vs. Sekisui Chemical Co |
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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