Correlation Between Arkema SA and AGC
Can any of the company-specific risk be diversified away by investing in both Arkema SA and AGC 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 Arkema SA and AGC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arkema SA and AGC Inc ADR, you can compare the effects of market volatilities on Arkema SA and AGC 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 Arkema SA with a short position of AGC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkema SA and AGC.
Diversification Opportunities for Arkema SA and AGC
Modest diversification
The 3 months correlation between Arkema and AGC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Arkema SA and AGC Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGC Inc ADR and Arkema SA 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 Arkema SA are associated (or correlated) with AGC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGC Inc ADR has no effect on the direction of Arkema SA i.e., Arkema SA and AGC go up and down completely randomly.
Pair Corralation between Arkema SA and AGC
Assuming the 90 days horizon Arkema SA is expected to under-perform the AGC. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arkema SA is 1.07 times less risky than AGC. The pink sheet trades about -0.16 of its potential returns per unit of risk. The AGC Inc ADR is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 706.00 in AGC Inc ADR on December 5, 2024 and sell it today you would lose (114.00) from holding AGC Inc ADR or give up 16.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 20.33% |
| Values | Daily Returns |
Arkema SA vs. AGC Inc ADR
Performance |
| Timeline |
| Arkema SA |
| AGC Inc ADR |
Arkema SA and AGC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arkema SA and AGC
The main advantage of trading using opposite Arkema SA and AGC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkema SA position performs unexpectedly, AGC 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 AGC will offset losses from the drop in AGC's long position.| Arkema SA vs. Allegiant Travel | ||
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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