Correlation Between Mechema Chemicals and Senao International
Can any of the company-specific risk be diversified away by investing in both Mechema Chemicals and Senao International 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 Mechema Chemicals and Senao International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mechema Chemicals Int and Senao International Co, you can compare the effects of market volatilities on Mechema Chemicals and Senao International 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 Mechema Chemicals with a short position of Senao International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mechema Chemicals and Senao International.
Diversification Opportunities for Mechema Chemicals and Senao International
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Mechema and Senao is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Mechema Chemicals Int and Senao International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senao International and Mechema Chemicals 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 Mechema Chemicals Int are associated (or correlated) with Senao International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senao International has no effect on the direction of Mechema Chemicals i.e., Mechema Chemicals and Senao International go up and down completely randomly.
Pair Corralation between Mechema Chemicals and Senao International
Assuming the 90 days trading horizon Mechema Chemicals Int is expected to generate 2.89 times more return on investment than Senao International. However, Mechema Chemicals is 2.89 times more volatile than Senao International Co. It trades about -0.02 of its potential returns per unit of risk. Senao International Co is currently generating about -0.27 per unit of risk. If you would invest 7,260 in Mechema Chemicals Int on September 24, 2024 and sell it today you would lose (240.00) from holding Mechema Chemicals Int or give up 3.31% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.46% |
Values | Daily Returns |
Mechema Chemicals Int vs. Senao International Co
Performance |
Timeline |
Mechema Chemicals Int |
Senao International |
Mechema Chemicals and Senao International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mechema Chemicals and Senao International
The main advantage of trading using opposite Mechema Chemicals and Senao International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mechema Chemicals position performs unexpectedly, Senao International 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 Senao International will offset losses from the drop in Senao International's long position.Mechema Chemicals vs. Nan Ya Plastics | Mechema Chemicals vs. China Petrochemical Development | Mechema Chemicals vs. Eternal Materials Co | Mechema Chemicals vs. TSRC Corp |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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