Correlation Between Albemarle Corp and Sika AG
Can any of the company-specific risk be diversified away by investing in both Albemarle Corp and Sika AG 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 Albemarle Corp and Sika AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albemarle Corp and Sika AG, you can compare the effects of market volatilities on Albemarle Corp and Sika AG 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 Albemarle Corp with a short position of Sika AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albemarle Corp and Sika AG.
Diversification Opportunities for Albemarle Corp and Sika AG
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Albemarle and Sika is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle Corp and Sika AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG and Albemarle Corp 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 Albemarle Corp are associated (or correlated) with Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG has no effect on the direction of Albemarle Corp i.e., Albemarle Corp and Sika AG go up and down completely randomly.
Pair Corralation between Albemarle Corp and Sika AG
Considering the 90-day investment horizon Albemarle Corp is expected to under-perform the Sika AG. In addition to that, Albemarle Corp is 1.39 times more volatile than Sika AG. It trades about -0.04 of its total potential returns per unit of risk. Sika AG is currently generating about 0.01 per unit of volatility. If you would invest 26,801 in Sika AG on September 1, 2024 and sell it today you would lose (1,394) from holding Sika AG or give up 5.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albemarle Corp vs. Sika AG
Performance |
| Timeline |
| Albemarle Corp |
| Sika AG |
Albemarle Corp and Sika AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albemarle Corp and Sika AG
The main advantage of trading using opposite Albemarle Corp and Sika AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albemarle Corp position performs unexpectedly, Sika AG 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 Sika AG will offset losses from the drop in Sika AG's long position.| Albemarle Corp vs. Linde plc Ordinary | Albemarle Corp vs. Air Products and | Albemarle Corp vs. Dupont De Nemours | Albemarle Corp vs. Sociedad Quimica y |
| Sika AG vs. Sherwin Williams Co | Sika AG vs. Air Liquide SA | Sika AG vs. LAir Liquide SA | Sika AG vs. Air Products and |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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