Correlation Between Westlake Chemical and SOFTBANK P

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

By analyzing existing cross correlation between Westlake Chemical and SOFTBANK P ADR, you can compare the effects of market volatilities on Westlake Chemical and SOFTBANK P 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 Westlake Chemical with a short position of SOFTBANK P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and SOFTBANK P.

Diversification Opportunities for Westlake Chemical and SOFTBANK P

-0.27

Correlation Coefficient

Westlake Chemical  SOFTBANK P

Very good diversification

The 3 months correlation between Westlake and SOFTBANK is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and SOFTBANK P ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTBANK P ADR and Westlake 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 Westlake Chemical are associated (or correlated) with SOFTBANK P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTBANK P ADR has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and SOFTBANK P go up and down completely randomly.

Pair Corralation between Westlake Chemical and SOFTBANK P

Assuming the 90 days horizon Westlake Chemical is expected to under-perform the SOFTBANK P. But the stock apears to be less risky and, when comparing its historical volatility, Westlake Chemical is 2.91 times less risky than SOFTBANK P. The stock trades about -0.05 of its potential returns per unit of risk. The SOFTBANK P ADR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,196  in SOFTBANK P ADR on September 12, 2024 and sell it today you would lose (36.00) from holding SOFTBANK P ADR or give up 3.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Westlake Chemical  vs.  SOFTBANK P ADR

Westlake Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

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

SOFTBANK P ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Westlake Chemical and SOFTBANK P

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

The idea behind Westlake Chemical and SOFTBANK P ADR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.