Correlation Between Sekisui Chemical and ManpowerGroup

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

Diversification Opportunities for Sekisui Chemical and ManpowerGroup

-0.24

Correlation Coefficient

Sekisui Chemical  ManpowerGroup

Very good diversification

The 3 months correlation between Sekisui and ManpowerGroup is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and ManpowerGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ManpowerGroup 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 ManpowerGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ManpowerGroup has no effect on the direction of Sekisui Chemical i.e., Sekisui Chemical and ManpowerGroup go up and down completely randomly.

Pair Corralation between Sekisui Chemical and ManpowerGroup

Assuming the 90 days horizon Sekisui Chemical Co is expected to generate 1.08 times more return on investment than ManpowerGroup. However, Sekisui Chemical is 1.08 times more volatile than ManpowerGroup. It trades about 0.03 of its potential returns per unit of risk. ManpowerGroup is currently generating about -0.02 per unit of risk. If you would invest  1,240  in Sekisui Chemical Co on October 23, 2024 and sell it today you would earn a total of  270.00  from holding Sekisui Chemical Co or generate 21.77% return on investment over 90 days.

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

Sekisui Chemical Co  vs.  ManpowerGroup

Sekisui Chemical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sekisui Chemical Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Sekisui Chemical reported solid returns over the last few months and may actually be approaching a breakup point.

ManpowerGroup

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ManpowerGroup are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ManpowerGroup is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sekisui Chemical and ManpowerGroup

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

The idea behind Sekisui Chemical Co and ManpowerGroup 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.