Correlation Between SEALED AIR and ROHM

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

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

Diversification Opportunities for SEALED AIR and ROHM

-0.63

Correlation Coefficient

SEALED AIR  ROHM

Excellent diversification

The 3 months correlation between SEALED and ROHM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and ROHM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROHM and SEALED 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 SEALED AIR are associated (or correlated) with ROHM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROHM has no effect on the direction of SEALED AIR i.e., SEALED AIR and ROHM go up and down completely randomly.

Pair Corralation between SEALED AIR and ROHM

Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the ROHM. But the stock apears to be less risky and, when comparing its historical volatility, SEALED AIR is 1.3 times less risky than ROHM. The stock trades about -0.2 of its potential returns per unit of risk. The ROHM Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  881.00  in ROHM Co on September 28, 2024 and sell it today you would lose (22.00) from holding ROHM Co or give up 2.5% of portfolio value over 90 days.

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

SEALED AIR   vs.  ROHM Co

SEALED AIR

Risk-Adjusted Performance

0 of 100

Very Weak

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

ROHM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROHM Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SEALED AIR and ROHM

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

The idea behind SEALED AIR and ROHM 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..