Correlation Between AdvanSix and BASF SE
Can any of the company-specific risk be diversified away by investing in both AdvanSix and BASF SE 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 AdvanSix and BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvanSix and BASF SE ADR, you can compare the effects of market volatilities on AdvanSix and BASF SE 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 AdvanSix with a short position of BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvanSix and BASF SE.
Diversification Opportunities for AdvanSix and BASF SE
Good diversification
The 3 months correlation between AdvanSix and BASF is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding AdvanSix and BASF SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE ADR and AdvanSix 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 AdvanSix are associated (or correlated) with BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE ADR has no effect on the direction of AdvanSix i.e., AdvanSix and BASF SE go up and down completely randomly.
Pair Corralation between AdvanSix and BASF SE
Given the investment horizon of 90 days AdvanSix is expected to generate 1.06 times more return on investment than BASF SE. However, AdvanSix is 1.06 times more volatile than BASF SE ADR. It trades about 0.23 of its potential returns per unit of risk. BASF SE ADR is currently generating about -0.17 per unit of risk. If you would invest 2,837 in AdvanSix on August 31, 2024 and sell it today you would earn a total of 325.00 from holding AdvanSix or generate 11.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AdvanSix vs. BASF SE ADR
Performance |
| Timeline |
| AdvanSix |
| BASF SE ADR |
AdvanSix and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvanSix and BASF SE
The main advantage of trading using opposite AdvanSix and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvanSix position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| AdvanSix vs. Methanex | AdvanSix vs. Lsb Industries | AdvanSix vs. Green Plains Renewable | AdvanSix vs. Tronox Holdings PLC |
| BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. First Graphene | BASF SE vs. Huntsman |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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