Correlation Between American Eagle and Soken Chemical

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

By analyzing existing cross correlation between American Eagle Outfitters and Soken Chemical Engineering, you can compare the effects of market volatilities on American Eagle and Soken 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 American Eagle with a short position of Soken Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Soken Chemical.

Diversification Opportunities for American Eagle and Soken Chemical

0.0

Correlation Coefficient

American Eagle  Soken Chemical

Pay attention - limited upside

The 3 months correlation between American and Soken is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Soken Chemical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soken Chemical Engin and American Eagle 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 American Eagle Outfitters are associated (or correlated) with Soken Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soken Chemical Engin has no effect on the direction of American Eagle i.e., American Eagle and Soken Chemical go up and down completely randomly.

Pair Corralation between American Eagle and Soken Chemical

If you would invest  1,728  in American Eagle Outfitters on September 12, 2024 and sell it today you would lose (28.00) from holding American Eagle Outfitters or give up 1.62% of portfolio value over 90 days.

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

American Eagle Outfitters  vs.  Soken Chemical Engineering

American Eagle Outfitters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Eagle Outfitters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American Eagle is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Soken Chemical Engin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soken Chemical Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Soken Chemical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Eagle and Soken Chemical

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

The idea behind American Eagle Outfitters and Soken Chemical Engineering 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.