Correlation Between Arkema SA and Assa Abloy
Can any of the company-specific risk be diversified away by investing in both Arkema SA and Assa Abloy 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 Assa Abloy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arkema SA ADR and Assa Abloy AB, you can compare the effects of market volatilities on Arkema SA and Assa Abloy 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 Assa Abloy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkema SA and Assa Abloy.
Diversification Opportunities for Arkema SA and Assa Abloy
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arkema and Assa is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Arkema SA ADR and Assa Abloy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assa Abloy AB 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 ADR are associated (or correlated) with Assa Abloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assa Abloy AB has no effect on the direction of Arkema SA i.e., Arkema SA and Assa Abloy go up and down completely randomly.
Pair Corralation between Arkema SA and Assa Abloy
Assuming the 90 days horizon Arkema SA ADR is expected to under-perform the Assa Abloy. In addition to that, Arkema SA is 1.22 times more volatile than Assa Abloy AB. It trades about -0.01 of its total potential returns per unit of risk. Assa Abloy AB is currently generating about 0.04 per unit of volatility. If you would invest 1,185 in Assa Abloy AB on November 2, 2024 and sell it today you would earn a total of 336.00 from holding Assa Abloy AB or generate 28.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Arkema SA ADR vs. Assa Abloy AB
Performance |
| Timeline |
| Arkema SA ADR |
| Assa Abloy AB |
Arkema SA and Assa Abloy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arkema SA and Assa Abloy
The main advantage of trading using opposite Arkema SA and Assa Abloy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkema SA position performs unexpectedly, Assa Abloy 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 Assa Abloy will offset losses from the drop in Assa Abloy's long position.| Arkema SA vs. Akzo Nobel NV | Arkema SA vs. Avoca LLC | Arkema SA vs. AGC Inc ADR | Arkema SA vs. AirBoss of America |
| Assa Abloy vs. Atlas Copco AB | Assa Abloy vs. Carlsberg AS | Assa Abloy vs. DSV Panalpina AS | Assa Abloy vs. Alfa Laval AB |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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