Correlation Between Vinyl Chemicals and Styrenix Performance

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

By analyzing existing cross correlation between Vinyl Chemicals Limited and Styrenix Performance Materials, you can compare the effects of market volatilities on Vinyl Chemicals and Styrenix Performance 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 Vinyl Chemicals with a short position of Styrenix Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vinyl Chemicals and Styrenix Performance.

Diversification Opportunities for Vinyl Chemicals and Styrenix Performance

0.87

Correlation Coefficient

Vinyl Chemicals  Styrenix Performance

Very poor diversification

The 3 months correlation between Vinyl and Styrenix is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vinyl Chemicals Limited and Styrenix Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Styrenix Performance and Vinyl Chemicals 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 Vinyl Chemicals Limited are associated (or correlated) with Styrenix Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Styrenix Performance has no effect on the direction of Vinyl Chemicals i.e., Vinyl Chemicals and Styrenix Performance go up and down completely randomly.

Pair Corralation between Vinyl Chemicals and Styrenix Performance

Assuming the 90 days trading horizon Vinyl Chemicals Limited is expected to generate 1.17 times more return on investment than Styrenix Performance. However, Vinyl Chemicals is 1.17 times more volatile than Styrenix Performance Materials. It trades about 0.11 of its potential returns per unit of risk. Styrenix Performance Materials is currently generating about 0.12 per unit of risk. If you would invest  28,092  in Vinyl Chemicals Limited on April 16, 2025 and sell it today you would earn a total of  3,893  from holding Vinyl Chemicals Limited or generate 13.86% return on investment over 90 days.

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

Vinyl Chemicals Limited  vs.  Styrenix Performance Materials

Vinyl Chemicals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vinyl Chemicals Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Vinyl Chemicals displayed solid returns over the last few months and may actually be approaching a breakup point.

Styrenix Performance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Styrenix Performance Materials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Styrenix Performance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vinyl Chemicals and Styrenix Performance

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

The idea behind Vinyl Chemicals Limited and Styrenix Performance Materials 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.