Correlation Between CVR Energy and Idemitsu Kosan

Can any of the company-specific risk be diversified away by investing in both CVR Energy and Idemitsu Kosan 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 CVR Energy and Idemitsu Kosan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVR Energy and Idemitsu Kosan CoLtd, you can compare the effects of market volatilities on CVR Energy and Idemitsu Kosan 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 CVR Energy with a short position of Idemitsu Kosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Idemitsu Kosan.

Diversification Opportunities for CVR Energy and Idemitsu Kosan

-0.49

Correlation Coefficient

CVR Energy  Idemitsu Kosan

Very good diversification

The 3 months correlation between CVR and Idemitsu is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Idemitsu Kosan CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan CoLtd and CVR Energy 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 CVR Energy are associated (or correlated) with Idemitsu Kosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idemitsu Kosan CoLtd has no effect on the direction of CVR Energy i.e., CVR Energy and Idemitsu Kosan go up and down completely randomly.

Pair Corralation between CVR Energy and Idemitsu Kosan

Considering the 90-day investment horizon CVR Energy is expected to under-perform the Idemitsu Kosan. In addition to that, CVR Energy is 8.8 times more volatile than Idemitsu Kosan CoLtd. It trades about -0.02 of its total potential returns per unit of risk. Idemitsu Kosan CoLtd is currently generating about -0.05 per unit of volatility. If you would invest  650.00  in Idemitsu Kosan CoLtd on October 26, 2024 and sell it today you would lose (10.00) from holding Idemitsu Kosan CoLtd or give up 1.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

CVR Energy  vs.  Idemitsu Kosan CoLtd

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CVR Energy is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Idemitsu Kosan CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idemitsu Kosan CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Idemitsu Kosan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CVR Energy and Idemitsu Kosan

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

The idea behind CVR Energy and Idemitsu Kosan CoLtd 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.