Correlation Between Sanyo Chemical and Mercedes Benz
Can any of the company-specific risk be diversified away by investing in both Sanyo Chemical and Mercedes Benz 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 Mercedes Benz 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 Mercedes Benz Group AG, you can compare the effects of market volatilities on Sanyo Chemical and Mercedes Benz 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 Mercedes Benz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and Mercedes Benz.
Diversification Opportunities for Sanyo Chemical and Mercedes Benz
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sanyo and Mercedes is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and Mercedes Benz Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercedes Benz Group 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 Mercedes Benz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercedes Benz Group has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and Mercedes Benz go up and down completely randomly.
Pair Corralation between Sanyo Chemical and Mercedes Benz
Assuming the 90 days horizon Sanyo Chemical Industries is expected to generate 0.98 times more return on investment than Mercedes Benz. However, Sanyo Chemical Industries is 1.02 times less risky than Mercedes Benz. It trades about -0.01 of its potential returns per unit of risk. Mercedes Benz Group AG is currently generating about -0.01 per unit of risk. If you would invest 2,640 in Sanyo Chemical Industries on September 14, 2024 and sell it today you would lose (120.00) from holding Sanyo Chemical Industries or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanyo Chemical Industries vs. Mercedes Benz Group AG
Performance |
| Timeline |
| Sanyo Chemical Industries |
| Mercedes Benz Group |
Sanyo Chemical and Mercedes Benz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Chemical and Mercedes Benz
The main advantage of trading using opposite Sanyo Chemical and Mercedes Benz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Chemical position performs unexpectedly, Mercedes Benz 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 Mercedes Benz will offset losses from the drop in Mercedes Benz's long position.| Sanyo Chemical vs. Hyrican Informationssysteme Aktiengesellschaft | Sanyo Chemical vs. PUBLIC STORAGE PRFO | Sanyo Chemical vs. LGI Homes | Sanyo Chemical vs. Tri Pointe Homes |
| Mercedes Benz vs. Seven West Media | Mercedes Benz vs. PARKEN Sport Entertainment | Mercedes Benz vs. EIDESVIK OFFSHORE NK | Mercedes Benz vs. GEAR4MUSIC LS 10 |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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