Correlation Between Judges Scientific and Eastman Chemical

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

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

Diversification Opportunities for Judges Scientific and Eastman Chemical

0.2

Correlation Coefficient

Judges Scientific  Eastman Chemical

Modest diversification

The 3 months correlation between Judges and Eastman is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Judges Scientific Plc and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Judges Scientific 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 Judges Scientific Plc are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Judges Scientific i.e., Judges Scientific and Eastman Chemical go up and down completely randomly.

Pair Corralation between Judges Scientific and Eastman Chemical

Assuming the 90 days trading horizon Judges Scientific Plc is expected to under-perform the Eastman Chemical. In addition to that, Judges Scientific is 1.16 times more volatile than Eastman Chemical Co. It trades about -0.09 of its total potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.01 per unit of volatility. If you would invest  9,074  in Eastman Chemical Co on December 24, 2024 and sell it today you would earn a total of  25.00  from holding Eastman Chemical Co or generate 0.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.32%
Values	Daily Returns

Judges Scientific Plc  vs.  Eastman Chemical Co

Judges Scientific Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Judges Scientific Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Eastman Chemical

Risk-Adjusted Performance

Weak

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

Pair Trading with Judges Scientific and Eastman Chemical

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

The idea behind Judges Scientific Plc and Eastman Chemical Co 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.