Correlation Between Occidental and Sekisui Chemical

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

By analyzing existing cross correlation between Occidental Petroleum 44 and Sekisui Chemical Co, you can compare the effects of market volatilities on Occidental and Sekisui 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 Occidental with a short position of Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental and Sekisui Chemical.

Diversification Opportunities for Occidental and Sekisui Chemical

0.13

Correlation Coefficient

Occidental  Sekisui Chemical

Average diversification

The 3 months correlation between Occidental and Sekisui is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum 44 and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical and Occidental 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 Occidental Petroleum 44 are associated (or correlated) with Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of Occidental i.e., Occidental and Sekisui Chemical go up and down completely randomly.

Pair Corralation between Occidental and Sekisui Chemical

Assuming the 90 days trading horizon Occidental is expected to generate 1.16 times less return on investment than Sekisui Chemical. In addition to that, Occidental is 2.28 times more volatile than Sekisui Chemical Co. It trades about 0.09 of its total potential returns per unit of risk. Sekisui Chemical Co is currently generating about 0.23 per unit of volatility. If you would invest  1,550  in Sekisui Chemical Co on October 8, 2024 and sell it today you would earn a total of  188.00  from holding Sekisui Chemical Co or generate 12.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.21%
Values	Daily Returns

Occidental Petroleum 44  vs.  Sekisui Chemical Co

Occidental Petroleum

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Occidental Petroleum 44 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Occidental may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sekisui Chemical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sekisui Chemical Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Sekisui Chemical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Occidental and Sekisui Chemical

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

The idea behind Occidental Petroleum 44 and Sekisui 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.