Correlation Between Science In and Eastman Chemical

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Can any of the company-specific risk be diversified away by investing in both Science In and Eastman 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 Science In and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science in Sport and Eastman Chemical Co, you can compare the effects of market volatilities on Science In and Eastman 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 Science In with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science In and Eastman Chemical.

Diversification Opportunities for Science In and Eastman Chemical

ScienceEastmanDiversified AwayScienceEastmanDiversified Away100%
-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Science and Eastman is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Science in Sport and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Science In 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 Science in Sport are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Science In i.e., Science In and Eastman Chemical go up and down completely randomly.

Pair Corralation between Science In and Eastman Chemical

Assuming the 90 days trading horizon Science in Sport is expected to generate 0.83 times more return on investment than Eastman Chemical. However, Science in Sport is 1.21 times less risky than Eastman Chemical. It trades about 0.12 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about -0.13 per unit of risk. If you would invest  2,400  in Science in Sport on September 19, 2024 and sell it today you would earn a total of  200.00  from holding Science in Sport or generate 8.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.44%
ValuesDaily Returns

Science in Sport  vs.  Eastman Chemical Co

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -50510
JavaScript chart by amCharts 3.21.15SIS 0IF3
       Timeline  
Science in Sport 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Science in Sport are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Science In may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2424.52525.52626.527
Eastman Chemical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eastman Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec95100105110

Science In and Eastman Chemical Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.46-3.34-2.22-1.10.01.142.33.464.62 0.050.100.150.20
JavaScript chart by amCharts 3.21.15SIS 0IF3
       Returns  

Pair Trading with Science In and Eastman Chemical

The main advantage of trading using opposite Science In and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science In position performs unexpectedly, Eastman 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.
The idea behind Science in Sport and Eastman 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.
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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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