Correlation Between Westlake Chemical and Atalaya Mining
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Atalaya Mining 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 Westlake Chemical and Atalaya Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical Corp and Atalaya Mining, you can compare the effects of market volatilities on Westlake Chemical and Atalaya Mining 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 Westlake Chemical with a short position of Atalaya Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Atalaya Mining.
Diversification Opportunities for Westlake Chemical and Atalaya Mining
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westlake and Atalaya is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and Atalaya Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atalaya Mining and Westlake 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 Westlake Chemical Corp are associated (or correlated) with Atalaya Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atalaya Mining has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Atalaya Mining go up and down completely randomly.
Pair Corralation between Westlake Chemical and Atalaya Mining
Assuming the 90 days trading horizon Westlake Chemical is expected to generate 3.43 times less return on investment than Atalaya Mining. But when comparing it to its historical volatility, Westlake Chemical Corp is 1.11 times less risky than Atalaya Mining. It trades about 0.01 of its potential returns per unit of risk. Atalaya Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 31,878 in Atalaya Mining on August 26, 2024 and sell it today you would earn a total of 3,022 from holding Atalaya Mining or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.91% |
| Values | Daily Returns |
Westlake Chemical Corp vs. Atalaya Mining
Performance |
| Timeline |
| Westlake Chemical Corp |
| Atalaya Mining |
Westlake Chemical and Atalaya Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Atalaya Mining
The main advantage of trading using opposite Westlake Chemical and Atalaya Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Atalaya Mining 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 Atalaya Mining will offset losses from the drop in Atalaya Mining's long position.| Westlake Chemical vs. Samsung Electronics Co | Westlake Chemical vs. Samsung Electronics Co | Westlake Chemical vs. Hyundai Motor | Westlake Chemical vs. Toyota Motor Corp |
| Atalaya Mining vs. Givaudan SA | Atalaya Mining vs. Antofagasta PLC | Atalaya Mining vs. Amaroq Minerals | Atalaya Mining vs. Anglo Asian Mining |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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