Correlation Between Eastman Chemical and 49327M3F9

Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and 49327M3F9 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 49327M3F9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eastman Chemical and KEY 585 15 NOV 27, you can compare the effects of market volatilities on Eastman Chemical and 49327M3F9 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 49327M3F9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and 49327M3F9.

Diversification Opportunities for Eastman Chemical and 49327M3F9

0.73

Correlation Coefficient

Eastman Chemical  49327M3F9

Poor diversification

The 3 months correlation between Eastman and 49327M3F9 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and KEY 585 15 NOV 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEY 585 15 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 49327M3F9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEY 585 15 has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and 49327M3F9 go up and down completely randomly.

Pair Corralation between Eastman Chemical and 49327M3F9

Considering the 90-day investment horizon Eastman Chemical is expected to under-perform the 49327M3F9. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical is 2.28 times less risky than 49327M3F9. The stock trades about -0.54 of its potential returns per unit of risk. The KEY 585 15 NOV 27 is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  10,244  in KEY 585 15 NOV 27 on September 25, 2024 and sell it today you would lose (1,215) from holding KEY 585 15 NOV 27 or give up 11.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.48%
Values	Daily Returns

Eastman Chemical  vs.  KEY 585 15 NOV 27

Eastman Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

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

KEY 585 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEY 585 15 NOV 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 49327M3F9 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eastman Chemical and 49327M3F9

The main advantage of trading using opposite Eastman Chemical and 49327M3F9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, 49327M3F9 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 49327M3F9 will offset losses from the drop in 49327M3F9's long position.

The idea behind Eastman Chemical and KEY 585 15 NOV 27 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.