Correlation Between Arkema SA and Israel
Can any of the company-specific risk be diversified away by investing in both Arkema SA and Israel 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 Israel 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 Israel, you can compare the effects of market volatilities on Arkema SA and Israel 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 Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkema SA and Israel.
Diversification Opportunities for Arkema SA and Israel
Good diversification
The 3 months correlation between Arkema and Israel is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Arkema SA ADR and Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel 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 Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel has no effect on the direction of Arkema SA i.e., Arkema SA and Israel go up and down completely randomly.
Pair Corralation between Arkema SA and Israel
Assuming the 90 days horizon Arkema SA ADR is expected to under-perform the Israel. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arkema SA ADR is 4.61 times less risky than Israel. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Israel is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 21,900 in Israel on December 5, 2024 and sell it today you would earn a total of 6,600 from holding Israel or generate 30.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arkema SA ADR vs. Israel
Performance |
| Timeline |
| Arkema SA ADR |
| Israel |
Arkema SA and Israel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arkema SA and Israel
The main advantage of trading using opposite Arkema SA and Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkema SA position performs unexpectedly, Israel 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 Israel will offset losses from the drop in Israel's long position.| Arkema SA vs. Akzo Nobel NV | ||
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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