Correlation Between BASF SE and AdvanSix
Can any of the company-specific risk be diversified away by investing in both BASF SE and AdvanSix 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 AdvanSix 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 AdvanSix, you can compare the effects of market volatilities on BASF SE and AdvanSix 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 AdvanSix. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and AdvanSix.
Diversification Opportunities for BASF SE and AdvanSix
Good diversification
The 3 months correlation between BASF and AdvanSix is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE NA and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix 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 AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of BASF SE i.e., BASF SE and AdvanSix go up and down completely randomly.
Pair Corralation between BASF SE and AdvanSix
Assuming the 90 days horizon BASF SE NA is expected to under-perform the AdvanSix. In addition to that, BASF SE is 1.27 times more volatile than AdvanSix. It trades about -0.19 of its total potential returns per unit of risk. AdvanSix is currently generating about 0.23 per unit of volatility. 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 |
BASF SE NA vs. AdvanSix
Performance |
| Timeline |
| BASF SE NA |
| AdvanSix |
BASF SE and AdvanSix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and AdvanSix
The main advantage of trading using opposite BASF SE and AdvanSix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, AdvanSix 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 AdvanSix will offset losses from the drop in AdvanSix'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 |
| AdvanSix vs. Methanex | AdvanSix vs. Lsb Industries | AdvanSix vs. Green Plains Renewable | AdvanSix vs. Tronox Holdings PLC |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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