Correlation Between BASF SE and Orbia AdvanceSAB
Can any of the company-specific risk be diversified away by investing in both BASF SE and Orbia AdvanceSAB 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 Orbia AdvanceSAB 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 Orbia Advance, you can compare the effects of market volatilities on BASF SE and Orbia AdvanceSAB 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 Orbia AdvanceSAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and Orbia AdvanceSAB.
Diversification Opportunities for BASF SE and Orbia AdvanceSAB
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BASF and Orbia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE NA and Orbia Advance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbia AdvanceSAB 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 Orbia AdvanceSAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbia AdvanceSAB has no effect on the direction of BASF SE i.e., BASF SE and Orbia AdvanceSAB go up and down completely randomly.
Pair Corralation between BASF SE and Orbia AdvanceSAB
Assuming the 90 days horizon BASF SE NA is expected to generate 0.49 times more return on investment than Orbia AdvanceSAB. However, BASF SE NA is 2.06 times less risky than Orbia AdvanceSAB. It trades about 0.01 of its potential returns per unit of risk. Orbia Advance is currently generating about -0.08 per unit of risk. If you would invest 4,508 in BASF SE NA on September 4, 2024 and sell it today you would earn a total of 50.00 from holding BASF SE NA or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.18% |
| Values | Daily Returns |
BASF SE NA vs. Orbia Advance
Performance |
| Timeline |
| BASF SE NA |
| Orbia AdvanceSAB |
BASF SE and Orbia AdvanceSAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and Orbia AdvanceSAB
The main advantage of trading using opposite BASF SE and Orbia AdvanceSAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, Orbia AdvanceSAB 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 Orbia AdvanceSAB will offset losses from the drop in Orbia AdvanceSAB'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 |
| Orbia AdvanceSAB vs. Solvay SA ADR | Orbia AdvanceSAB vs. Dow Inc | Orbia AdvanceSAB vs. Shin Etsu Chemical Co | Orbia AdvanceSAB vs. First Graphene |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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