Correlation Between BASF SE and NanoXplore
Can any of the company-specific risk be diversified away by investing in both BASF SE and NanoXplore 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 NanoXplore 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 NanoXplore, you can compare the effects of market volatilities on BASF SE and NanoXplore 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 NanoXplore. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and NanoXplore.
Diversification Opportunities for BASF SE and NanoXplore
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BASF and NanoXplore is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE NA and NanoXplore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NanoXplore 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 NanoXplore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NanoXplore has no effect on the direction of BASF SE i.e., BASF SE and NanoXplore go up and down completely randomly.
Pair Corralation between BASF SE and NanoXplore
Assuming the 90 days horizon BASF SE NA is expected to generate 1.32 times more return on investment than NanoXplore. However, BASF SE is 1.32 times more volatile than NanoXplore. It trades about -0.17 of its potential returns per unit of risk. NanoXplore is currently generating about -0.25 per unit of risk. If you would invest 4,980 in BASF SE NA on August 27, 2024 and sell it today you would lose (530.00) from holding BASF SE NA or give up 10.64% 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. NanoXplore
Performance |
| Timeline |
| BASF SE NA |
| NanoXplore |
BASF SE and NanoXplore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and NanoXplore
The main advantage of trading using opposite BASF SE and NanoXplore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, NanoXplore 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 NanoXplore will offset losses from the drop in NanoXplore'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 |
| NanoXplore vs. Origin Materials | NanoXplore vs. BASF SE NA | NanoXplore vs. Braskem SA Class | NanoXplore vs. Lsb Industries |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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