Correlation Between Sanyo Chemical and China Coal
Can any of the company-specific risk be diversified away by investing in both Sanyo Chemical and China Coal 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 China Coal 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 China Coal Energy, you can compare the effects of market volatilities on Sanyo Chemical and China Coal 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 China Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and China Coal.
Diversification Opportunities for Sanyo Chemical and China Coal
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sanyo and China is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and China Coal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Coal Energy 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 China Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Coal Energy has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and China Coal go up and down completely randomly.
Pair Corralation between Sanyo Chemical and China Coal
Assuming the 90 days horizon Sanyo Chemical Industries is expected to generate 0.67 times more return on investment than China Coal. However, Sanyo Chemical Industries is 1.49 times less risky than China Coal. It trades about 0.17 of its potential returns per unit of risk. China Coal Energy is currently generating about -0.22 per unit of risk. If you would invest 2,360 in Sanyo Chemical Industries on December 4, 2024 and sell it today you would earn a total of 140.00 from holding Sanyo Chemical Industries or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanyo Chemical Industries vs. China Coal Energy
Performance |
| Timeline |
| Sanyo Chemical Industries |
| China Coal Energy |
Sanyo Chemical and China Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Chemical and China Coal
The main advantage of trading using opposite Sanyo Chemical and China Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Chemical position performs unexpectedly, China Coal 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 China Coal will offset losses from the drop in China Coal's long position.| Sanyo Chemical vs. Nomad Foods | Sanyo Chemical vs. Sekisui Chemical Co | Sanyo Chemical vs. SENECA FOODS A | Sanyo Chemical vs. Mitsui Chemicals |
| China Coal vs. Sumitomo Rubber Industries | China Coal vs. Grupo Carso SAB | China Coal vs. Rayonier Advanced Materials | China Coal vs. Geely Automobile Holdings |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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