Correlation Between Arkema SA and G6 Materials
Can any of the company-specific risk be diversified away by investing in both Arkema SA and G6 Materials 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 G6 Materials 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 G6 Materials Corp, you can compare the effects of market volatilities on Arkema SA and G6 Materials 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 G6 Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkema SA and G6 Materials.
Diversification Opportunities for Arkema SA and G6 Materials
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arkema and GPHBF is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Arkema SA ADR and G6 Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G6 Materials Corp 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 G6 Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G6 Materials Corp has no effect on the direction of Arkema SA i.e., Arkema SA and G6 Materials go up and down completely randomly.
Pair Corralation between Arkema SA and G6 Materials
Assuming the 90 days horizon Arkema SA ADR is expected to under-perform the G6 Materials. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arkema SA ADR is 5.35 times less risky than G6 Materials. The pink sheet trades about -0.09 of its potential returns per unit of risk. The G6 Materials Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5.10 in G6 Materials Corp on September 1, 2024 and sell it today you would lose (2.10) from holding G6 Materials Corp or give up 41.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arkema SA ADR vs. G6 Materials Corp
Performance |
| Timeline |
| Arkema SA ADR |
| G6 Materials Corp |
Arkema SA and G6 Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arkema SA and G6 Materials
The main advantage of trading using opposite Arkema SA and G6 Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkema SA position performs unexpectedly, G6 Materials 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 G6 Materials will offset losses from the drop in G6 Materials' 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 |
| G6 Materials vs. Sherwin Williams Co | G6 Materials vs. Air Liquide SA | G6 Materials vs. Air Products and | G6 Materials vs. Ecolab Inc |
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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