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 Co, 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

-0.2

Correlation Coefficient

CVR Energy  Idemitsu Kosan

Good diversification

The 3 months correlation between CVR and Idemitsu is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Idemitsu Kosan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan 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 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 generate 1.06 times less return on investment than Idemitsu Kosan. In addition to that, CVR Energy is 1.0 times more volatile than Idemitsu Kosan Co. It trades about 0.11 of its total potential returns per unit of risk. Idemitsu Kosan Co is currently generating about 0.12 per unit of volatility. If you would invest  1,239  in Idemitsu Kosan Co on December 19, 2024 and sell it today you would earn a total of  247.00  from holding Idemitsu Kosan Co or generate 19.94% return on investment over 90 days.

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

CVR Energy  vs.  Idemitsu Kosan Co

CVR Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, CVR Energy demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Idemitsu Kosan

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Idemitsu Kosan Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Idemitsu Kosan showed solid returns over the last few months and may actually be approaching a breakup point.

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 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.