Correlation Between AGC and Arkema SA
Can any of the company-specific risk be diversified away by investing in both AGC and Arkema SA 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 AGC and Arkema SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGC Inc ADR and Arkema SA, you can compare the effects of market volatilities on AGC and Arkema SA 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 AGC with a short position of Arkema SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGC and Arkema SA.
Diversification Opportunities for AGC and Arkema SA
Modest diversification
The 3 months correlation between AGC and Arkema is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding AGC Inc ADR and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and AGC 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 AGC Inc ADR are associated (or correlated) with Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA has no effect on the direction of AGC i.e., AGC and Arkema SA go up and down completely randomly.
Pair Corralation between AGC and Arkema SA
Assuming the 90 days horizon AGC Inc ADR is expected to generate 1.07 times more return on investment than Arkema SA. However, AGC is 1.07 times more volatile than Arkema SA. It trades about -0.01 of its potential returns per unit of risk. Arkema SA is currently generating about -0.16 per unit of risk. 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 |
AGC Inc ADR vs. Arkema SA
Performance |
| Timeline |
| AGC Inc ADR |
| Arkema SA |
AGC and Arkema SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGC and Arkema SA
The main advantage of trading using opposite AGC and Arkema SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGC position performs unexpectedly, Arkema SA 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 Arkema SA will offset losses from the drop in Arkema SA's long position.| AGC vs. Asahi Kaisei Corp | ||
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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