Correlation Between Akzo Nobel and Kronos Worldwide
Can any of the company-specific risk be diversified away by investing in both Akzo Nobel and Kronos Worldwide 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 Kronos Worldwide 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 Kronos Worldwide, you can compare the effects of market volatilities on Akzo Nobel and Kronos Worldwide 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 Kronos Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akzo Nobel and Kronos Worldwide.
Diversification Opportunities for Akzo Nobel and Kronos Worldwide
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Akzo and Kronos is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Akzo Nobel NV and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide 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 Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of Akzo Nobel i.e., Akzo Nobel and Kronos Worldwide go up and down completely randomly.
Pair Corralation between Akzo Nobel and Kronos Worldwide
Assuming the 90 days horizon Akzo Nobel NV is expected to under-perform the Kronos Worldwide. But the otc stock apears to be less risky and, when comparing its historical volatility, Akzo Nobel NV is 1.51 times less risky than Kronos Worldwide. The otc stock trades about -0.08 of its potential returns per unit of risk. The Kronos Worldwide is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 923.00 in Kronos Worldwide on September 12, 2024 and sell it today you would earn a total of 118.00 from holding Kronos Worldwide or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 71.77% |
| Values | Daily Returns |
Akzo Nobel NV vs. Kronos Worldwide
Performance |
| Timeline |
| Akzo Nobel NV |
| Kronos Worldwide |
Akzo Nobel and Kronos Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akzo Nobel and Kronos Worldwide
The main advantage of trading using opposite Akzo Nobel and Kronos Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akzo Nobel position performs unexpectedly, Kronos Worldwide 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 Kronos Worldwide will offset losses from the drop in Kronos Worldwide's long position.| Akzo Nobel vs. Avoca LLC | Akzo Nobel vs. AGC Inc ADR | Akzo Nobel vs. Arkema SA ADR | Akzo Nobel vs. AirBoss of America |
| Kronos Worldwide vs. Griffon | Kronos Worldwide vs. Merck Company | Kronos Worldwide vs. Brinker International | Kronos Worldwide vs. Alcoa Corp |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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