Correlation Between Kronos Worldwide and Olin
Can any of the company-specific risk be diversified away by investing in both Kronos Worldwide and Olin 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 Kronos Worldwide and Olin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kronos Worldwide and Olin Corporation, you can compare the effects of market volatilities on Kronos Worldwide and Olin 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 Kronos Worldwide with a short position of Olin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kronos Worldwide and Olin.
Diversification Opportunities for Kronos Worldwide and Olin
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kronos and Olin is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Worldwide and Olin Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olin and Kronos Worldwide 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 Kronos Worldwide are associated (or correlated) with Olin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olin has no effect on the direction of Kronos Worldwide i.e., Kronos Worldwide and Olin go up and down completely randomly.
Pair Corralation between Kronos Worldwide and Olin
Considering the 90-day investment horizon Kronos Worldwide is expected to generate 3.77 times less return on investment than Olin. In addition to that, Kronos Worldwide is 1.32 times more volatile than Olin Corporation. It trades about 0.02 of its total potential returns per unit of risk. Olin Corporation is currently generating about 0.12 per unit of volatility. If you would invest 4,070 in Olin Corporation on August 30, 2024 and sell it today you would earn a total of 200.00 from holding Olin Corporation or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kronos Worldwide vs. Olin Corp.
Performance |
| Timeline |
| Kronos Worldwide |
| Olin |
Kronos Worldwide and Olin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kronos Worldwide and Olin
The main advantage of trading using opposite Kronos Worldwide and Olin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kronos Worldwide position performs unexpectedly, Olin 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 Olin will offset losses from the drop in Olin's long position.| Kronos Worldwide vs. Oil Dri | Kronos Worldwide vs. Quaker Chemical | Kronos Worldwide vs. Ecovyst | Kronos Worldwide vs. Minerals Technologies |
| Olin vs. Select Energy Services | Olin vs. Westlake Chemical | Olin vs. Sensient Technologies | Olin vs. Axalta Coating Systems |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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