Correlation Between Sanyo Chemical and Citizens Financial

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

By analyzing existing cross correlation between Sanyo Chemical Industries and Citizens Financial Group, you can compare the effects of market volatilities on Sanyo Chemical and Citizens Financial 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 Sanyo Chemical with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and Citizens Financial.

Diversification Opportunities for Sanyo Chemical and Citizens Financial

-0.28

Correlation Coefficient

Sanyo Chemical  Citizens Financial

Very good diversification

The 3 months correlation between Sanyo and Citizens is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial and Sanyo 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 Sanyo Chemical Industries are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and Citizens Financial go up and down completely randomly.

Pair Corralation between Sanyo Chemical and Citizens Financial

Assuming the 90 days horizon Sanyo Chemical is expected to generate 5.47 times less return on investment than Citizens Financial. But when comparing it to its historical volatility, Sanyo Chemical Industries is 1.38 times less risky than Citizens Financial. It trades about 0.03 of its potential returns per unit of risk. Citizens Financial Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,270  in Citizens Financial Group on October 9, 2024 and sell it today you would earn a total of  1,035  from holding Citizens Financial Group or generate 31.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Sanyo Chemical Industries  vs.  Citizens Financial Group

Sanyo Chemical Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Citizens Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Citizens Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sanyo Chemical and Citizens Financial

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

The idea behind Sanyo Chemical Industries and Citizens Financial Group 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 CEOs Directory module to screen CEOs from public companies around the world.