Correlation Between Sanyo Chemical and CRRC

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

Diversification Opportunities for Sanyo Chemical and CRRC

0.15

Correlation Coefficient

Sanyo Chemical  CRRC

Average diversification

The 3 months correlation between Sanyo and CRRC is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and CRRC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRRC Limited 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 CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRRC Limited has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and CRRC go up and down completely randomly.

Pair Corralation between Sanyo Chemical and CRRC

Assuming the 90 days horizon Sanyo Chemical is expected to generate 11.53 times less return on investment than CRRC. But when comparing it to its historical volatility, Sanyo Chemical Industries is 3.79 times less risky than CRRC. It trades about 0.03 of its potential returns per unit of risk. CRRC Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  34.00  in CRRC Limited on October 13, 2024 and sell it today you would earn a total of  27.00  from holding CRRC Limited or generate 79.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.31%
Values	Daily Returns

Sanyo Chemical Industries  vs.  CRRC Limited

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.

CRRC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sanyo Chemical and CRRC

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

The idea behind Sanyo Chemical Industries and CRRC Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.