Correlation Between Casing Macron and Standard Chemical

Can any of the company-specific risk be diversified away by investing in both Casing Macron and Standard 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 Casing Macron and Standard Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Casing Macron Technology and Standard Chemical Pharmaceutical, you can compare the effects of market volatilities on Casing Macron and Standard 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 Casing Macron with a short position of Standard Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casing Macron and Standard Chemical.

Diversification Opportunities for Casing Macron and Standard Chemical

0.19

Correlation Coefficient

Casing Macron  Standard Chemical

Average diversification

The 3 months correlation between Casing and Standard is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Casing Macron Technology and Standard Chemical Pharmaceutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Chemical and Casing Macron 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 Casing Macron Technology are associated (or correlated) with Standard Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Chemical has no effect on the direction of Casing Macron i.e., Casing Macron and Standard Chemical go up and down completely randomly.

Pair Corralation between Casing Macron and Standard Chemical

Assuming the 90 days trading horizon Casing Macron Technology is expected to under-perform the Standard Chemical. In addition to that, Casing Macron is 2.64 times more volatile than Standard Chemical Pharmaceutical. It trades about -0.08 of its total potential returns per unit of risk. Standard Chemical Pharmaceutical is currently generating about -0.05 per unit of volatility. If you would invest  6,430  in Standard Chemical Pharmaceutical on September 18, 2024 and sell it today you would lose (230.00) from holding Standard Chemical Pharmaceutical or give up 3.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Casing Macron Technology  vs.  Standard Chemical Pharmaceutic

Casing Macron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Casing Macron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Standard Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Chemical Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Standard Chemical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Casing Macron and Standard Chemical

The main advantage of trading using opposite Casing Macron and Standard Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casing Macron position performs unexpectedly, Standard 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 Standard Chemical will offset losses from the drop in Standard Chemical's long position.

The idea behind Casing Macron Technology and Standard Chemical Pharmaceutical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.