Correlation Between Sekisui Chemical and Byggmax Group

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

By analyzing existing cross correlation between Sekisui Chemical Co and Byggmax Group AB, you can compare the effects of market volatilities on Sekisui Chemical and Byggmax Group 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 Byggmax Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekisui Chemical and Byggmax Group.

Diversification Opportunities for Sekisui Chemical and Byggmax Group

0.48

Correlation Coefficient

Sekisui Chemical  Byggmax Group

Very weak diversification

The 3 months correlation between Sekisui and Byggmax is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and Byggmax Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byggmax Group AB 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 Co are associated (or correlated) with Byggmax Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byggmax Group AB has no effect on the direction of Sekisui Chemical i.e., Sekisui Chemical and Byggmax Group go up and down completely randomly.

Pair Corralation between Sekisui Chemical and Byggmax Group

Assuming the 90 days horizon Sekisui Chemical Co is expected to generate 0.81 times more return on investment than Byggmax Group. However, Sekisui Chemical Co is 1.23 times less risky than Byggmax Group. It trades about 0.14 of its potential returns per unit of risk. Byggmax Group AB is currently generating about 0.07 per unit of risk. If you would invest  1,380  in Sekisui Chemical Co on October 5, 2024 and sell it today you would earn a total of  270.00  from holding Sekisui Chemical Co or generate 19.57% return on investment over 90 days.

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

Sekisui Chemical Co  vs.  Byggmax Group AB

Sekisui Chemical

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Sekisui Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Sekisui Chemical reported solid returns over the last few months and may actually be approaching a breakup point.

Byggmax Group AB

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Byggmax Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Byggmax Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sekisui Chemical and Byggmax Group

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

The idea behind Sekisui Chemical Co and Byggmax Group AB 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 CEOs Directory module to screen CEOs from public companies around the world.