Correlation Between Trane Technologies and Soken Chemical

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

By analyzing existing cross correlation between Trane Technologies plc and Soken Chemical Engineering, you can compare the effects of market volatilities on Trane Technologies and Soken 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 Trane Technologies with a short position of Soken Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trane Technologies and Soken Chemical.

Diversification Opportunities for Trane Technologies and Soken Chemical

0.0

Correlation Coefficient

Trane Technologies  Soken Chemical

Pay attention - limited upside

The 3 months correlation between Trane and Soken is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Trane Technologies plc and Soken Chemical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soken Chemical Engin and Trane Technologies 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 Trane Technologies plc are associated (or correlated) with Soken Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soken Chemical Engin has no effect on the direction of Trane Technologies i.e., Trane Technologies and Soken Chemical go up and down completely randomly.

Pair Corralation between Trane Technologies and Soken Chemical

If you would invest  31,165  in Trane Technologies plc on September 3, 2024 and sell it today you would earn a total of  8,135  from holding Trane Technologies plc or generate 26.1% return on investment over 90 days.

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

Trane Technologies plc  vs.  Soken Chemical Engineering

Trane Technologies plc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trane Technologies plc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Trane Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Soken Chemical Engin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soken Chemical Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Soken 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 Trane Technologies and Soken Chemical

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

The idea behind Trane Technologies plc and Soken Chemical Engineering 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.