Correlation Between PPG Industries and ALPEK SAB
Can any of the company-specific risk be diversified away by investing in both PPG Industries and ALPEK SAB 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 PPG Industries and ALPEK SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and ALPEK SAB de, you can compare the effects of market volatilities on PPG Industries and ALPEK SAB 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 PPG Industries with a short position of ALPEK SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and ALPEK SAB.
Diversification Opportunities for PPG Industries and ALPEK SAB
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPG and ALPEK is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and ALPEK SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPEK SAB de and PPG Industries 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 PPG Industries are associated (or correlated) with ALPEK SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPEK SAB de has no effect on the direction of PPG Industries i.e., PPG Industries and ALPEK SAB go up and down completely randomly.
Pair Corralation between PPG Industries and ALPEK SAB
Assuming the 90 days trading horizon PPG Industries is expected to generate 2.05 times less return on investment than ALPEK SAB. But when comparing it to its historical volatility, PPG Industries is 2.76 times less risky than ALPEK SAB. It trades about 0.04 of its potential returns per unit of risk. ALPEK SAB de is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,203 in ALPEK SAB de on September 3, 2024 and sell it today you would earn a total of 162.00 from holding ALPEK SAB de or generate 13.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPG Industries vs. ALPEK SAB de
Performance |
| Timeline |
| PPG Industries |
| ALPEK SAB de |
PPG Industries and ALPEK SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and ALPEK SAB
The main advantage of trading using opposite PPG Industries and ALPEK SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, ALPEK SAB 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 ALPEK SAB will offset losses from the drop in ALPEK SAB's long position.| PPG Industries vs. Cognizant Technology Solutions | PPG Industries vs. Samsung Electronics Co | PPG Industries vs. First Republic Bank | PPG Industries vs. New Oriental Education |
| ALPEK SAB vs. Verizon Communications | ALPEK SAB vs. DXC Technology | ALPEK SAB vs. New Oriental Education | ALPEK SAB vs. Grupo Carso SAB |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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