Correlation Between GAMING FAC and Sekisui Chemical

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

By analyzing existing cross correlation between GAMING FAC SA and Sekisui Chemical Co, you can compare the effects of market volatilities on GAMING FAC and Sekisui 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 GAMING FAC with a short position of Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMING FAC and Sekisui Chemical.

Diversification Opportunities for GAMING FAC and Sekisui Chemical

-0.18

Correlation Coefficient

GAMING FAC  Sekisui Chemical

Good diversification

The 3 months correlation between GAMING and Sekisui is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical and GAMING FAC 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 GAMING FAC SA are associated (or correlated) with Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of GAMING FAC i.e., GAMING FAC and Sekisui Chemical go up and down completely randomly.

Pair Corralation between GAMING FAC and Sekisui Chemical

Assuming the 90 days horizon GAMING FAC SA is expected to generate 2.07 times more return on investment than Sekisui Chemical. However, GAMING FAC is 2.07 times more volatile than Sekisui Chemical Co. It trades about 0.03 of its potential returns per unit of risk. Sekisui Chemical Co is currently generating about 0.04 per unit of risk. If you would invest  124.00  in GAMING FAC SA on October 3, 2024 and sell it today you would earn a total of  36.00  from holding GAMING FAC SA or generate 29.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GAMING FAC SA  vs.  Sekisui Chemical Co

GAMING FAC SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMING FAC SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sekisui Chemical

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sekisui Chemical Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sekisui Chemical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GAMING FAC and Sekisui Chemical

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

The idea behind GAMING FAC SA and Sekisui Chemical Co 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.