Correlation Between BASF SE and Asahi Kaisei
Can any of the company-specific risk be diversified away by investing in both BASF SE and Asahi Kaisei 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 Asahi Kaisei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASF SE NA and Asahi Kaisei Corp, you can compare the effects of market volatilities on BASF SE and Asahi Kaisei 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 Asahi Kaisei. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and Asahi Kaisei.
Diversification Opportunities for BASF SE and Asahi Kaisei
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BASF and Asahi is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE NA and Asahi Kaisei Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Kaisei Corp 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 NA are associated (or correlated) with Asahi Kaisei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Kaisei Corp has no effect on the direction of BASF SE i.e., BASF SE and Asahi Kaisei go up and down completely randomly.
Pair Corralation between BASF SE and Asahi Kaisei
Assuming the 90 days horizon BASF SE NA is expected to under-perform the Asahi Kaisei. In addition to that, BASF SE is 2.6 times more volatile than Asahi Kaisei Corp. It trades about -0.08 of its total potential returns per unit of risk. Asahi Kaisei Corp is currently generating about -0.17 per unit of volatility. If you would invest 1,483 in Asahi Kaisei Corp on September 3, 2024 and sell it today you would lose (62.00) from holding Asahi Kaisei Corp or give up 4.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BASF SE NA vs. Asahi Kaisei Corp
Performance |
| Timeline |
| BASF SE NA |
| Asahi Kaisei Corp |
BASF SE and Asahi Kaisei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and Asahi Kaisei
The main advantage of trading using opposite BASF SE and Asahi Kaisei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, Asahi Kaisei 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 Asahi Kaisei will offset losses from the drop in Asahi Kaisei's long position.| BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. BASF SE ADR | BASF SE vs. Braskem SA Class | BASF SE vs. Celanese |
| Asahi Kaisei vs. Haydale Graphene Industries | Asahi Kaisei vs. Versarien plc | Asahi Kaisei vs. NanoXplore | Asahi Kaisei vs. G6 Materials 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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