Correlation Between Arkema SA and Barloworld
Can any of the company-specific risk be diversified away by investing in both Arkema SA and Barloworld 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 Barloworld 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 Barloworld Ltd ADR, you can compare the effects of market volatilities on Arkema SA and Barloworld 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 Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkema SA and Barloworld.
Diversification Opportunities for Arkema SA and Barloworld
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arkema and Barloworld is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Arkema SA ADR and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld 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 ADR are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Arkema SA i.e., Arkema SA and Barloworld go up and down completely randomly.
Pair Corralation between Arkema SA and Barloworld
Assuming the 90 days horizon Arkema SA ADR is expected to under-perform the Barloworld. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arkema SA ADR is 1.8 times less risky than Barloworld. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Barloworld Ltd ADR is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 465.00 in Barloworld Ltd ADR on September 1, 2024 and sell it today you would lose (42.00) from holding Barloworld Ltd ADR or give up 9.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Arkema SA ADR vs. Barloworld Ltd ADR
Performance |
| Timeline |
| Arkema SA ADR |
| Barloworld ADR |
Arkema SA and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arkema SA and Barloworld
The main advantage of trading using opposite Arkema SA and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkema SA position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld'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 |
| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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