Correlation Between Kansai Paint and LyondellBasell Industries
Can any of the company-specific risk be diversified away by investing in both Kansai Paint and LyondellBasell Industries 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 Kansai Paint and LyondellBasell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kansai Paint Co and LyondellBasell Industries NV, you can compare the effects of market volatilities on Kansai Paint and LyondellBasell Industries 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 Kansai Paint with a short position of LyondellBasell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kansai Paint and LyondellBasell Industries.
Diversification Opportunities for Kansai Paint and LyondellBasell Industries
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kansai and LyondellBasell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kansai Paint Co and LyondellBasell Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LyondellBasell Industries and Kansai Paint 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 Kansai Paint Co are associated (or correlated) with LyondellBasell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LyondellBasell Industries has no effect on the direction of Kansai Paint i.e., Kansai Paint and LyondellBasell Industries go up and down completely randomly.
Pair Corralation between Kansai Paint and LyondellBasell Industries
If you would invest 8,333 in LyondellBasell Industries NV on September 1, 2024 and sell it today you would earn a total of 1.00 from holding LyondellBasell Industries NV or generate 0.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Kansai Paint Co vs. LyondellBasell Industries NV
Performance |
| Timeline |
| Kansai Paint |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| LyondellBasell Industries |
Kansai Paint and LyondellBasell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kansai Paint and LyondellBasell Industries
The main advantage of trading using opposite Kansai Paint and LyondellBasell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kansai Paint position performs unexpectedly, LyondellBasell Industries 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 LyondellBasell Industries will offset losses from the drop in LyondellBasell Industries' long position.| Kansai Paint vs. PPG Industries | Kansai Paint vs. Air Products and | Kansai Paint vs. Linde plc Ordinary | Kansai Paint vs. Ecolab Inc |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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