Correlation Between Ashland Global and Sociedad Quimica
Can any of the company-specific risk be diversified away by investing in both Ashland Global and Sociedad Quimica 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 Ashland Global and Sociedad Quimica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashland Global Holdings and Sociedad Quimica y, you can compare the effects of market volatilities on Ashland Global and Sociedad Quimica 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 Ashland Global with a short position of Sociedad Quimica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashland Global and Sociedad Quimica.
Diversification Opportunities for Ashland Global and Sociedad Quimica
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ashland and Sociedad is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and Sociedad Quimica y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Quimica y and Ashland Global 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 Ashland Global Holdings are associated (or correlated) with Sociedad Quimica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Quimica y has no effect on the direction of Ashland Global i.e., Ashland Global and Sociedad Quimica go up and down completely randomly.
Pair Corralation between Ashland Global and Sociedad Quimica
Considering the 90-day investment horizon Ashland Global Holdings is expected to generate 0.56 times more return on investment than Sociedad Quimica. However, Ashland Global Holdings is 1.77 times less risky than Sociedad Quimica. It trades about -0.03 of its potential returns per unit of risk. Sociedad Quimica y is currently generating about -0.04 per unit of risk. If you would invest 10,833 in Ashland Global Holdings on August 28, 2024 and sell it today you would lose (2,856) from holding Ashland Global Holdings or give up 26.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashland Global Holdings vs. Sociedad Quimica y
Performance |
| Timeline |
| Ashland Global Holdings |
| Sociedad Quimica y |
Ashland Global and Sociedad Quimica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashland Global and Sociedad Quimica
The main advantage of trading using opposite Ashland Global and Sociedad Quimica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashland Global position performs unexpectedly, Sociedad Quimica 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 Sociedad Quimica will offset losses from the drop in Sociedad Quimica's long position.| Ashland Global vs. H B Fuller | Ashland Global vs. Element Solutions | Ashland Global vs. Balchem | Ashland Global vs. Avantor |
| Sociedad Quimica vs. Linde plc Ordinary | Sociedad Quimica vs. Air Products and | Sociedad Quimica vs. Sherwin Williams Co | Sociedad Quimica vs. Albemarle Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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