Correlation Between Sekisui Chemical and ChemoMetec A/S

Can any of the company-specific risk be diversified away by investing in both Sekisui Chemical and ChemoMetec A/S 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 ChemoMetec A/S 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 ChemoMetec AS, you can compare the effects of market volatilities on Sekisui Chemical and ChemoMetec A/S 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 ChemoMetec A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekisui Chemical and ChemoMetec A/S.

Diversification Opportunities for Sekisui Chemical and ChemoMetec A/S

0.3

Correlation Coefficient

Sekisui Chemical  ChemoMetec A/S

Weak diversification

The 3 months correlation between Sekisui and ChemoMetec is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and ChemoMetec AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChemoMetec A/S 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 ChemoMetec A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChemoMetec A/S has no effect on the direction of Sekisui Chemical i.e., Sekisui Chemical and ChemoMetec A/S go up and down completely randomly.

Pair Corralation between Sekisui Chemical and ChemoMetec A/S

Assuming the 90 days horizon Sekisui Chemical is expected to generate 226.17 times less return on investment than ChemoMetec A/S. But when comparing it to its historical volatility, Sekisui Chemical Co is 1.84 times less risky than ChemoMetec A/S. It trades about 0.0 of its potential returns per unit of risk. ChemoMetec AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,725  in ChemoMetec AS on December 24, 2024 and sell it today you would earn a total of  415.00  from holding ChemoMetec AS or generate 6.17% return on investment over 90 days.

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

Sekisui Chemical Co  vs.  ChemoMetec AS

Sekisui Chemical

Risk-Adjusted Performance

OK

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

ChemoMetec A/S

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ChemoMetec AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ChemoMetec A/S may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sekisui Chemical and ChemoMetec A/S

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

The idea behind Sekisui Chemical Co and ChemoMetec AS 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.