Correlation Between BASF SE and ARDAGH METAL
Can any of the company-specific risk be diversified away by investing in both BASF SE and ARDAGH METAL 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 BASF SE and ARDAGH METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASF SE and ARDAGH METAL PACDL 0001, you can compare the effects of market volatilities on BASF SE and ARDAGH METAL 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 BASF SE with a short position of ARDAGH METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and ARDAGH METAL.
Diversification Opportunities for BASF SE and ARDAGH METAL
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BASF and ARDAGH is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE and ARDAGH METAL PACDL 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARDAGH METAL PACDL and BASF SE 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 BASF SE are associated (or correlated) with ARDAGH METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARDAGH METAL PACDL has no effect on the direction of BASF SE i.e., BASF SE and ARDAGH METAL go up and down completely randomly.
Pair Corralation between BASF SE and ARDAGH METAL
Assuming the 90 days trading horizon BASF SE is expected to generate 3.43 times less return on investment than ARDAGH METAL. But when comparing it to its historical volatility, BASF SE is 1.71 times less risky than ARDAGH METAL. It trades about 0.08 of its potential returns per unit of risk. ARDAGH METAL PACDL 0001 is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 260.00 in ARDAGH METAL PACDL 0001 on December 1, 2024 and sell it today you would earn a total of 40.00 from holding ARDAGH METAL PACDL 0001 or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BASF SE vs. ARDAGH METAL PACDL 0001
Performance |
| Timeline |
| BASF SE |
| ARDAGH METAL PACDL |
BASF SE and ARDAGH METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and ARDAGH METAL
The main advantage of trading using opposite BASF SE and ARDAGH METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, ARDAGH METAL 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 ARDAGH METAL will offset losses from the drop in ARDAGH METAL's long position.| BASF SE vs. Linedata Services SA | BASF SE vs. ECHO INVESTMENT ZY | BASF SE vs. MICRONIC MYDATA | BASF SE vs. Guangdong Investment Limited |
| ARDAGH METAL vs. SILICON LABORATOR | ARDAGH METAL vs. US Foods Holding | ARDAGH METAL vs. TIANDE CHEMICAL | ARDAGH METAL vs. Suntory Beverage Food |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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