Correlation Between Sanyo Chemical and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Sanyo Chemical and Eastman 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 Sanyo Chemical and Eastman Chemical 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 Eastman Chemical, you can compare the effects of market volatilities on Sanyo Chemical and Eastman 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 Sanyo Chemical with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and Eastman Chemical.
Diversification Opportunities for Sanyo Chemical and Eastman Chemical
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sanyo and Eastman is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and Eastman Chemical go up and down completely randomly.
Pair Corralation between Sanyo Chemical and Eastman Chemical
Assuming the 90 days horizon Sanyo Chemical Industries is expected to under-perform the Eastman Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Sanyo Chemical Industries is 1.74 times less risky than Eastman Chemical. The stock trades about -0.18 of its potential returns per unit of risk. The Eastman Chemical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 10,015 in Eastman Chemical on August 29, 2024 and sell it today you would earn a total of 75.00 from holding Eastman Chemical or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanyo Chemical Industries vs. Eastman Chemical
Performance |
| Timeline |
| Sanyo Chemical Industries |
| Eastman Chemical |
Sanyo Chemical and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Chemical and Eastman Chemical
The main advantage of trading using opposite Sanyo Chemical and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Chemical position performs unexpectedly, Eastman 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Sanyo Chemical vs. Linde plc | Sanyo Chemical vs. Superior Plus Corp | Sanyo Chemical vs. NMI Holdings | Sanyo Chemical vs. SIVERS SEMICONDUCTORS AB |
| Eastman Chemical vs. Air Liquide SA | Eastman Chemical vs. AIR LIQUIDE ADR | Eastman Chemical vs. Air Products and | Eastman Chemical vs. Shin Etsu 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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