Correlation Between BASF SE and GAMING FAC
Can any of the company-specific risk be diversified away by investing in both BASF SE and GAMING FAC 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 GAMING FAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASF SE and GAMING FAC SA, you can compare the effects of market volatilities on BASF SE and GAMING FAC 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 GAMING FAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and GAMING FAC.
Diversification Opportunities for BASF SE and GAMING FAC
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between BASF and GAMING is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE and GAMING FAC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMING FAC SA 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 GAMING FAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMING FAC SA has no effect on the direction of BASF SE i.e., BASF SE and GAMING FAC go up and down completely randomly.
Pair Corralation between BASF SE and GAMING FAC
Assuming the 90 days trading horizon BASF SE is expected to under-perform the GAMING FAC. But the stock apears to be less risky and, when comparing its historical volatility, BASF SE is 2.43 times less risky than GAMING FAC. The stock trades about -0.11 of its potential returns per unit of risk. The GAMING FAC SA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 174.00 in GAMING FAC SA on September 1, 2024 and sell it today you would lose (11.00) from holding GAMING FAC SA or give up 6.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BASF SE vs. GAMING FAC SA
Performance |
| Timeline |
| BASF SE |
| GAMING FAC SA |
BASF SE and GAMING FAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and GAMING FAC
The main advantage of trading using opposite BASF SE and GAMING FAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, GAMING FAC 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 GAMING FAC will offset losses from the drop in GAMING FAC's long position.| BASF SE vs. ARDAGH METAL PACDL 0001 | BASF SE vs. FIREWEED METALS P | BASF SE vs. NEWELL RUBBERMAID | BASF SE vs. SIMS METAL MGT |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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