Correlation Between AIR PRODCHEMICALS and SEKISUI CHEMICAL

Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS 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 AIR PRODCHEMICALS and SEKISUI CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AIR PRODCHEMICALS and SEKISUI CHEMICAL, you can compare the effects of market volatilities on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS with a short position of SEKISUI CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and SEKISUI CHEMICAL.

Diversification Opportunities for AIR PRODCHEMICALS and SEKISUI CHEMICAL

-0.31

Correlation Coefficient

AIR PRODCHEMICALS  SEKISUI CHEMICAL

Very good diversification

The 3 months correlation between AIR and SEKISUI is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI CHEMICAL and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and SEKISUI CHEMICAL go up and down completely randomly.

Pair Corralation between AIR PRODCHEMICALS and SEKISUI CHEMICAL

Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to under-perform the SEKISUI CHEMICAL. In addition to that, AIR PRODCHEMICALS is 1.2 times more volatile than SEKISUI CHEMICAL. It trades about -0.03 of its total potential returns per unit of risk. SEKISUI CHEMICAL is currently generating about -0.03 per unit of volatility. If you would invest  1,650  in SEKISUI CHEMICAL on December 26, 2024 and sell it today you would lose (40.00) from holding SEKISUI CHEMICAL or give up 2.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

AIR PRODCHEMICALS  vs.  SEKISUI CHEMICAL

AIR PRODCHEMICALS

Risk-Adjusted Performance

Very Weak

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

SEKISUI CHEMICAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEKISUI CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, SEKISUI CHEMICAL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AIR PRODCHEMICALS and SEKISUI CHEMICAL

The main advantage of trading using opposite AIR PRODCHEMICALS and SEKISUI CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS 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 AIR PRODCHEMICALS and SEKISUI CHEMICAL 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.