Correlation Between Huntsman and Valhi
Can any of the company-specific risk be diversified away by investing in both Huntsman and Valhi 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 Huntsman and Valhi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntsman and Valhi Inc, you can compare the effects of market volatilities on Huntsman and Valhi 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 Huntsman with a short position of Valhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntsman and Valhi.
Diversification Opportunities for Huntsman and Valhi
Very weak diversification
The 3 months correlation between Huntsman and Valhi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman and Valhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valhi Inc and Huntsman 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 Huntsman are associated (or correlated) with Valhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valhi Inc has no effect on the direction of Huntsman i.e., Huntsman and Valhi go up and down completely randomly.
Pair Corralation between Huntsman and Valhi
Considering the 90-day investment horizon Huntsman is expected to generate 0.23 times more return on investment than Valhi. However, Huntsman is 4.44 times less risky than Valhi. It trades about -0.42 of its potential returns per unit of risk. Valhi Inc is currently generating about -0.16 per unit of risk. If you would invest 2,294 in Huntsman on August 23, 2024 and sell it today you would lose (333.00) from holding Huntsman or give up 14.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntsman vs. Valhi Inc
Performance |
| Timeline |
| Huntsman |
| Valhi Inc |
Huntsman and Valhi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntsman and Valhi
The main advantage of trading using opposite Huntsman and Valhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntsman position performs unexpectedly, Valhi 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 Valhi will offset losses from the drop in Valhi's long position.| Huntsman vs. Valhi Inc | Huntsman vs. Lsb Industries | Huntsman vs. Westlake Chemical Partners | Huntsman vs. Braskem SA Class |
| Valhi vs. Huntsman | Valhi vs. Lsb Industries | Valhi vs. Westlake Chemical Partners | Valhi vs. Green Plains Renewable |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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