Correlation Between Eastman Chemical and MicroAlgo

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

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

Diversification Opportunities for Eastman Chemical and MicroAlgo

0.49

Correlation Coefficient

Eastman Chemical  MicroAlgo

Very weak diversification

The 3 months correlation between Eastman and MicroAlgo is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and MicroAlgo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroAlgo and Eastman 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 Eastman Chemical are associated (or correlated) with MicroAlgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroAlgo has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and MicroAlgo go up and down completely randomly.

Pair Corralation between Eastman Chemical and MicroAlgo

Considering the 90-day investment horizon Eastman Chemical is expected to generate 0.27 times more return on investment than MicroAlgo. However, Eastman Chemical is 3.68 times less risky than MicroAlgo. It trades about -0.12 of its potential returns per unit of risk. MicroAlgo is currently generating about -0.17 per unit of risk. If you would invest  8,171  in Eastman Chemical on May 16, 2025 and sell it today you would lose (1,829) from holding Eastman Chemical or give up 22.38% of portfolio value over 90 days.

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

Eastman Chemical  vs.  MicroAlgo

Eastman Chemical

Risk-Adjusted Performance

Weakest

Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

MicroAlgo

Risk-Adjusted Performance

Weakest

Over the last 90 days MicroAlgo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Eastman Chemical and MicroAlgo

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

The idea behind Eastman Chemical and MicroAlgo 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.