Correlation Between Eastman Chemical and Pettenati

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

By analyzing existing cross correlation between Eastman Chemical and Pettenati SA Industria, you can compare the effects of market volatilities on Eastman Chemical and Pettenati 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 Eastman Chemical with a short position of Pettenati. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Pettenati.

Diversification Opportunities for Eastman Chemical and Pettenati

0.0

Correlation Coefficient

Eastman Chemical  Pettenati

Pay attention - limited upside

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

Pair Corralation between Eastman Chemical and Pettenati

If you would invest (100.00) in Pettenati SA Industria on October 26, 2024 and sell it today you would earn a total of  100.00  from holding Pettenati SA Industria or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Eastman Chemical  vs.  Pettenati SA Industria

Eastman Chemical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Chemical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Eastman Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pettenati SA Industria

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eastman Chemical and Pettenati

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

The idea behind Eastman Chemical and Pettenati SA Industria 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.