Correlation Between HF Sinclair and Idemitsu Kosan

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

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

Diversification Opportunities for HF Sinclair and Idemitsu Kosan

-0.32

Correlation Coefficient

HF Sinclair  Idemitsu Kosan

Very good diversification

The 3 months correlation between DINO and Idemitsu is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp 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 HF Sinclair 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 HF Sinclair Corp 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 HF Sinclair i.e., HF Sinclair and Idemitsu Kosan go up and down completely randomly.

Pair Corralation between HF Sinclair and Idemitsu Kosan

Given the investment horizon of 90 days HF Sinclair Corp is expected to under-perform the Idemitsu Kosan. In addition to that, HF Sinclair is 4.07 times more volatile than Idemitsu Kosan CoLtd. It trades about -0.11 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	Insignificant
Accuracy	93.65%
Values	Daily Returns

HF Sinclair Corp  vs.  Idemitsu Kosan CoLtd

HF Sinclair Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 HF Sinclair and Idemitsu Kosan

The main advantage of trading using opposite HF Sinclair and Idemitsu Kosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF Sinclair 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 HF Sinclair Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.