Correlation Between Rayonier Advanced and SEKISUI CHEMICAL

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

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

Diversification Opportunities for Rayonier Advanced and SEKISUI CHEMICAL

-0.28

Correlation Coefficient

Rayonier Advanced  SEKISUI CHEMICAL

Very good diversification

The 3 months correlation between Rayonier and SEKISUI is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier Advanced Materials and SEKISUI CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEKISUI CHEMICAL and Rayonier Advanced 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 Rayonier Advanced Materials 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 Rayonier Advanced i.e., Rayonier Advanced and SEKISUI CHEMICAL go up and down completely randomly.

Pair Corralation between Rayonier Advanced and SEKISUI CHEMICAL

Assuming the 90 days horizon Rayonier Advanced Materials is expected to under-perform the SEKISUI CHEMICAL. In addition to that, Rayonier Advanced is 2.06 times more volatile than SEKISUI CHEMICAL. It trades about -0.13 of its total potential returns per unit of risk. SEKISUI CHEMICAL is currently generating about 0.09 per unit of volatility. If you would invest  1,470  in SEKISUI CHEMICAL on December 22, 2024 and sell it today you would earn a total of  150.00  from holding SEKISUI CHEMICAL or generate 10.2% return on investment over 90 days.

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

Rayonier Advanced Materials  vs.  SEKISUI CHEMICAL

Rayonier Advanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rayonier Advanced Materials 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.

SEKISUI CHEMICAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEKISUI CHEMICAL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, SEKISUI CHEMICAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Rayonier Advanced and SEKISUI CHEMICAL

The main advantage of trading using opposite Rayonier Advanced and SEKISUI CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rayonier Advanced 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 Rayonier Advanced Materials 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.