Correlation Between Esprinet SpA and SEKISUI CHEMICAL

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

By analyzing existing cross correlation between Esprinet SpA and SEKISUI CHEMICAL, you can compare the effects of market volatilities on Esprinet SpA and SEKISUI CHEMICAL 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 Esprinet SpA with a short position of SEKISUI CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esprinet SpA and SEKISUI CHEMICAL.

Diversification Opportunities for Esprinet SpA and SEKISUI CHEMICAL

-0.81

Correlation Coefficient

Esprinet SpA  SEKISUI CHEMICAL

Pay attention - limited upside

The 3 months correlation between Esprinet and SEKISUI is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Esprinet SpA and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI CHEMICAL and Esprinet SpA 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 Esprinet SpA are associated (or correlated) with SEKISUI CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEKISUI CHEMICAL has no effect on the direction of Esprinet SpA i.e., Esprinet SpA and SEKISUI CHEMICAL go up and down completely randomly.

Pair Corralation between Esprinet SpA and SEKISUI CHEMICAL

Assuming the 90 days trading horizon Esprinet SpA is expected to under-perform the SEKISUI CHEMICAL. In addition to that, Esprinet SpA is 1.3 times more volatile than SEKISUI CHEMICAL. It trades about -0.02 of its total potential returns per unit of risk. SEKISUI CHEMICAL is currently generating about 0.06 per unit of volatility. If you would invest  1,310  in SEKISUI CHEMICAL on October 5, 2024 and sell it today you would earn a total of  330.00  from holding SEKISUI CHEMICAL or generate 25.19% return on investment over 90 days.

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

Esprinet SpA  vs.  SEKISUI CHEMICAL

Esprinet SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Esprinet SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SEKISUI CHEMICAL

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days SEKISUI CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, SEKISUI CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esprinet SpA and SEKISUI CHEMICAL

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

The idea behind Esprinet SpA and SEKISUI CHEMICAL 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.