Correlation Between FORWARD AIR and Sanyo Chemical

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

By analyzing existing cross correlation between FORWARD AIR P and Sanyo Chemical Industries, you can compare the effects of market volatilities on FORWARD AIR and Sanyo 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 FORWARD AIR with a short position of Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and Sanyo Chemical.

Diversification Opportunities for FORWARD AIR and Sanyo Chemical

-0.41

Correlation Coefficient

FORWARD AIR  Sanyo Chemical

Very good diversification

The 3 months correlation between FORWARD and Sanyo is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries and FORWARD AIR 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 FORWARD AIR P are associated (or correlated) with Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and Sanyo Chemical go up and down completely randomly.

Pair Corralation between FORWARD AIR and Sanyo Chemical

Assuming the 90 days horizon FORWARD AIR P is expected to under-perform the Sanyo Chemical. In addition to that, FORWARD AIR is 2.72 times more volatile than Sanyo Chemical Industries. It trades about -0.15 of its total potential returns per unit of risk. Sanyo Chemical Industries is currently generating about 0.01 per unit of volatility. If you would invest  2,440  in Sanyo Chemical Industries on December 26, 2024 and sell it today you would earn a total of  0.00  from holding Sanyo Chemical Industries or generate 0.0% return on investment over 90 days.

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

FORWARD AIR P  vs.  Sanyo Chemical Industries

FORWARD AIR P

Risk-Adjusted Performance

Very Weak

Over the last 90 days FORWARD AIR P 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sanyo Chemical Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanyo Chemical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sanyo Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FORWARD AIR and Sanyo Chemical

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

The idea behind FORWARD AIR P and Sanyo Chemical Industries 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.