Correlation Between SEKISUI CHEMICAL and Perma Fix

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

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

Diversification Opportunities for SEKISUI CHEMICAL and Perma Fix

-0.37

Correlation Coefficient

SEKISUI CHEMICAL  Perma Fix

Very good diversification

The 3 months correlation between SEKISUI and Perma is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding SEKISUI CHEMICAL and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental and SEKISUI CHEMICAL 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 SEKISUI CHEMICAL are associated (or correlated) with Perma Fix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of SEKISUI CHEMICAL i.e., SEKISUI CHEMICAL and Perma Fix go up and down completely randomly.

Pair Corralation between SEKISUI CHEMICAL and Perma Fix

Assuming the 90 days trading horizon SEKISUI CHEMICAL is expected to generate 5.27 times less return on investment than Perma Fix. But when comparing it to its historical volatility, SEKISUI CHEMICAL is 2.85 times less risky than Perma Fix. It trades about 0.04 of its potential returns per unit of risk. Perma Fix Environmental Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  354.00  in Perma Fix Environmental Services on October 4, 2024 and sell it today you would earn a total of  686.00  from holding Perma Fix Environmental Services or generate 193.79% return on investment over 90 days.

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

SEKISUI CHEMICAL  vs.  Perma Fix Environmental Servic

SEKISUI CHEMICAL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SEKISUI CHEMICAL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, SEKISUI CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Perma Fix Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perma Fix Environmental Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Perma Fix 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 SEKISUI CHEMICAL and Perma Fix

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

The idea behind SEKISUI CHEMICAL and Perma Fix Environmental Services 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.