Correlation Between Sekisui Chemical and AutoNation

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

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

Diversification Opportunities for Sekisui Chemical and AutoNation

0.26

Correlation Coefficient

Sekisui Chemical  AutoNation

Modest diversification

The 3 months correlation between Sekisui and AutoNation is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and Sekisui 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 Sekisui Chemical Co are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Sekisui Chemical i.e., Sekisui Chemical and AutoNation go up and down completely randomly.

Pair Corralation between Sekisui Chemical and AutoNation

Assuming the 90 days horizon Sekisui Chemical is expected to generate 2.53 times less return on investment than AutoNation. But when comparing it to its historical volatility, Sekisui Chemical Co is 1.06 times less risky than AutoNation. It trades about 0.07 of its potential returns per unit of risk. AutoNation is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  16,000  in AutoNation on May 27, 2025 and sell it today you would earn a total of  2,675  from holding AutoNation or generate 16.72% return on investment over 90 days.

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

Sekisui Chemical Co  vs.  AutoNation

Sekisui Chemical

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Sekisui Chemical Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sekisui Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AutoNation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AutoNation are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AutoNation reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sekisui Chemical and AutoNation

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

The idea behind Sekisui Chemical Co and AutoNation 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.