Correlation Between Range Resources and Soken Chemical

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

By analyzing existing cross correlation between Range Resources Corp and Soken Chemical Engineering, you can compare the effects of market volatilities on Range Resources and Soken 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 Range Resources with a short position of Soken Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Range Resources and Soken Chemical.

Diversification Opportunities for Range Resources and Soken Chemical

0.35

Correlation Coefficient

Range Resources  Soken Chemical

Weak diversification

The 3 months correlation between Range and Soken is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Range Resources Corp and Soken Chemical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soken Chemical Engin and Range Resources 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 Range Resources Corp are associated (or correlated) with Soken Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soken Chemical Engin has no effect on the direction of Range Resources i.e., Range Resources and Soken Chemical go up and down completely randomly.

Pair Corralation between Range Resources and Soken Chemical

Assuming the 90 days horizon Range Resources Corp is expected to generate 0.21 times more return on investment than Soken Chemical. However, Range Resources Corp is 4.74 times less risky than Soken Chemical. It trades about -0.03 of its potential returns per unit of risk. Soken Chemical Engineering is currently generating about -0.13 per unit of risk. If you would invest  6,933  in Range Resources Corp on December 29, 2024 and sell it today you would lose (233.00) from holding Range Resources Corp or give up 3.36% of portfolio value over 90 days.

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

Range Resources Corp  vs.  Soken Chemical Engineering

Range Resources Corp

Risk-Adjusted Performance

Very Weak

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

Soken Chemical Engin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Soken Chemical Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Range Resources and Soken Chemical

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

The idea behind Range Resources Corp and Soken Chemical Engineering 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.