Correlation Between TR Property and Eastman Chemical

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

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

Diversification Opportunities for TR Property and Eastman Chemical

0.53

Correlation Coefficient

TR Property  Eastman Chemical

Very weak diversification

The 3 months correlation between TRY and Eastman is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding TR Property Investment and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and TR Property 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 TR Property Investment are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of TR Property i.e., TR Property and Eastman Chemical go up and down completely randomly.

Pair Corralation between TR Property and Eastman Chemical

Assuming the 90 days trading horizon TR Property Investment is expected to generate 0.79 times more return on investment than Eastman Chemical. However, TR Property Investment is 1.26 times less risky than Eastman Chemical. It trades about -0.04 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about -0.04 per unit of risk. If you would invest  31,694  in TR Property Investment on November 29, 2024 and sell it today you would lose (1,294) from holding TR Property Investment or give up 4.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.44%
Values	Daily Returns

TR Property Investment  vs.  Eastman Chemical Co

TR Property Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days TR Property Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TR Property is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Eastman Chemical

Risk-Adjusted Performance

Very Weak

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

Pair Trading with TR Property and Eastman Chemical

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

The idea behind TR Property Investment and Eastman Chemical 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.