Correlation Between Hanison Construction and SEKISUI CHEMICAL

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

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

Diversification Opportunities for Hanison Construction and SEKISUI CHEMICAL

0.0

Correlation Coefficient

Hanison Construction  SEKISUI CHEMICAL

Pay attention - limited upside

The 3 months correlation between Hanison and SEKISUI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hanison Construction Holdings and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI CHEMICAL and Hanison Construction 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 Hanison Construction Holdings 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 Hanison Construction i.e., Hanison Construction and SEKISUI CHEMICAL go up and down completely randomly.

Pair Corralation between Hanison Construction and SEKISUI CHEMICAL

Assuming the 90 days trading horizon Hanison Construction Holdings is expected to generate 1.67 times more return on investment than SEKISUI CHEMICAL. However, Hanison Construction is 1.67 times more volatile than SEKISUI CHEMICAL. It trades about 0.05 of its potential returns per unit of risk. SEKISUI CHEMICAL is currently generating about 0.03 per unit of risk. If you would invest  8.53  in Hanison Construction Holdings on September 3, 2024 and sell it today you would earn a total of  5.47  from holding Hanison Construction Holdings or generate 64.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Hanison Construction Holdings  vs.  SEKISUI CHEMICAL

Hanison Construction

Risk-Adjusted Performance

0 of 100

Very Weak

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

SEKISUI CHEMICAL

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEKISUI CHEMICAL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, SEKISUI CHEMICAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hanison Construction and SEKISUI CHEMICAL

The main advantage of trading using opposite Hanison Construction and SEKISUI CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanison Construction 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 Hanison Construction Holdings 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.