Correlation Between Akzo Nobel and Green Star
Can any of the company-specific risk be diversified away by investing in both Akzo Nobel and Green Star 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 Akzo Nobel and Green Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akzo Nobel NV and Green Star Products, you can compare the effects of market volatilities on Akzo Nobel and Green Star 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 Akzo Nobel with a short position of Green Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akzo Nobel and Green Star.
Diversification Opportunities for Akzo Nobel and Green Star
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Akzo and Green is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Akzo Nobel NV and Green Star Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Star Products and Akzo Nobel 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 Akzo Nobel NV are associated (or correlated) with Green Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Star Products has no effect on the direction of Akzo Nobel i.e., Akzo Nobel and Green Star go up and down completely randomly.
Pair Corralation between Akzo Nobel and Green Star
Assuming the 90 days horizon Akzo Nobel NV is expected to under-perform the Green Star. But the otc stock apears to be less risky and, when comparing its historical volatility, Akzo Nobel NV is 7.6 times less risky than Green Star. The otc stock trades about -0.07 of its potential returns per unit of risk. The Green Star Products is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.13 in Green Star Products on September 1, 2024 and sell it today you would lose (0.02) from holding Green Star Products or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akzo Nobel NV vs. Green Star Products
Performance |
| Timeline |
| Akzo Nobel NV |
| Green Star Products |
Akzo Nobel and Green Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akzo Nobel and Green Star
The main advantage of trading using opposite Akzo Nobel and Green Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akzo Nobel position performs unexpectedly, Green Star 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 Green Star will offset losses from the drop in Green Star's long position.| Akzo Nobel vs. Sherwin Williams Co | Akzo Nobel vs. Air Liquide SA | Akzo Nobel vs. Air Products and | Akzo Nobel vs. Ecolab Inc |
| Green Star vs. Sherwin Williams Co | Green Star vs. Air Liquide SA | Green Star vs. Air Products and | Green Star vs. Ecolab Inc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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