Correlation Between Sanyo Chemical and VIRG NATL

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

Diversification Opportunities for Sanyo Chemical and VIRG NATL

-0.44

Correlation Coefficient

Sanyo Chemical  VIRG NATL

Very good diversification

The 3 months correlation between Sanyo and VIRG is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and VIRG NATL BANKSH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIRG NATL BANKSH 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 VIRG NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIRG NATL BANKSH has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and VIRG NATL go up and down completely randomly.

Pair Corralation between Sanyo Chemical and VIRG NATL

Assuming the 90 days horizon Sanyo Chemical is expected to generate 6.21 times less return on investment than VIRG NATL. But when comparing it to its historical volatility, Sanyo Chemical Industries is 2.28 times less risky than VIRG NATL. It trades about 0.04 of its potential returns per unit of risk. VIRG NATL BANKSH is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,574  in VIRG NATL BANKSH on September 23, 2024 and sell it today you would earn a total of  1,006  from holding VIRG NATL BANKSH or generate 39.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sanyo Chemical Industries  vs.  VIRG NATL BANKSH

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

VIRG NATL BANKSH

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sanyo Chemical and VIRG NATL

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

The idea behind Sanyo Chemical Industries and VIRG NATL BANKSH 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..