Correlation Between Axalta Coating and Koppers Holdings
Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Koppers Holdings 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 Axalta Coating and Koppers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and Koppers Holdings, you can compare the effects of market volatilities on Axalta Coating and Koppers Holdings 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 Axalta Coating with a short position of Koppers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Koppers Holdings.
Diversification Opportunities for Axalta Coating and Koppers Holdings
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Axalta and Koppers is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Koppers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koppers Holdings and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with Koppers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koppers Holdings has no effect on the direction of Axalta Coating i.e., Axalta Coating and Koppers Holdings go up and down completely randomly.
Pair Corralation between Axalta Coating and Koppers Holdings
Given the investment horizon of 90 days Axalta Coating Systems is expected to generate 0.7 times more return on investment than Koppers Holdings. However, Axalta Coating Systems is 1.44 times less risky than Koppers Holdings. It trades about 0.05 of its potential returns per unit of risk. Koppers Holdings is currently generating about 0.03 per unit of risk. If you would invest 3,167 in Axalta Coating Systems on August 31, 2024 and sell it today you would earn a total of 879.00 from holding Axalta Coating Systems or generate 27.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axalta Coating Systems vs. Koppers Holdings
Performance |
| Timeline |
| Axalta Coating Systems |
| Koppers Holdings |
Axalta Coating and Koppers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Koppers Holdings
The main advantage of trading using opposite Axalta Coating and Koppers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating position performs unexpectedly, Koppers Holdings 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 Koppers Holdings will offset losses from the drop in Koppers Holdings' long position.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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