Correlation Between Sanyo Chemical and REINET INVESTMENTS

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

Diversification Opportunities for Sanyo Chemical and REINET INVESTMENTS

-0.22

Correlation Coefficient

Sanyo Chemical  REINET INVESTMENTS

Very good diversification

The 3 months correlation between Sanyo and REINET is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and REINET INVESTMENTS SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REINET INVESTMENTS SCA 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 REINET INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REINET INVESTMENTS SCA has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and REINET INVESTMENTS go up and down completely randomly.

Pair Corralation between Sanyo Chemical and REINET INVESTMENTS

Assuming the 90 days horizon Sanyo Chemical Industries is expected to generate 0.51 times more return on investment than REINET INVESTMENTS. However, Sanyo Chemical Industries is 1.98 times less risky than REINET INVESTMENTS. It trades about -0.03 of its potential returns per unit of risk. REINET INVESTMENTS SCA is currently generating about -0.08 per unit of risk. If you would invest  2,400  in Sanyo Chemical Industries on September 28, 2024 and sell it today you would lose (20.00) from holding Sanyo Chemical Industries or give up 0.83% of portfolio value over 90 days.

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

Sanyo Chemical Industries  vs.  REINET INVESTMENTS SCA

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

REINET INVESTMENTS SCA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in REINET INVESTMENTS SCA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, REINET INVESTMENTS 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 REINET INVESTMENTS

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

The idea behind Sanyo Chemical Industries and REINET INVESTMENTS SCA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.