Correlation Between Sanyo Chemical and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Sanyo Chemical and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO , you can compare the effects of market volatilities on Sanyo Chemical and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and IMPERIAL TOBACCO.
Diversification Opportunities for Sanyo Chemical and IMPERIAL TOBACCO
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sanyo and IMPERIAL is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Sanyo Chemical and IMPERIAL TOBACCO
Assuming the 90 days horizon Sanyo Chemical Industries is expected to under-perform the IMPERIAL TOBACCO. In addition to that, Sanyo Chemical is 1.21 times more volatile than IMPERIAL TOBACCO . It trades about -0.01 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.23 per unit of volatility. If you would invest 1,902 in IMPERIAL TOBACCO on September 1, 2024 and sell it today you would earn a total of 1,177 from holding IMPERIAL TOBACCO or generate 61.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanyo Chemical Industries vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| Sanyo Chemical Industries |
| IMPERIAL TOBACCO |
Sanyo Chemical and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Chemical and IMPERIAL TOBACCO
The main advantage of trading using opposite Sanyo Chemical and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Chemical position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| Sanyo Chemical vs. The Sherwin Williams | Sanyo Chemical vs. SIKA AG UNSPADR | Sanyo Chemical vs. LyondellBasell Industries NV | Sanyo Chemical vs. Albemarle |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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