Correlation Between PPG Industries and Kronos Worldwide
Can any of the company-specific risk be diversified away by investing in both PPG Industries and Kronos Worldwide 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 Kronos Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and Kronos Worldwide, you can compare the effects of market volatilities on PPG Industries and Kronos Worldwide 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 Kronos Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and Kronos Worldwide.
Diversification Opportunities for PPG Industries and Kronos Worldwide
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PPG and Kronos is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide 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 Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of PPG Industries i.e., PPG Industries and Kronos Worldwide go up and down completely randomly.
Pair Corralation between PPG Industries and Kronos Worldwide
Considering the 90-day investment horizon PPG Industries is expected to generate 0.41 times more return on investment than Kronos Worldwide. However, PPG Industries is 2.45 times less risky than Kronos Worldwide. It trades about -0.03 of its potential returns per unit of risk. Kronos Worldwide is currently generating about -0.03 per unit of risk. If you would invest 13,020 in PPG Industries on August 30, 2024 and sell it today you would lose (675.00) from holding PPG Industries or give up 5.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPG Industries vs. Kronos Worldwide
Performance |
| Timeline |
| PPG Industries |
| Kronos Worldwide |
PPG Industries and Kronos Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and Kronos Worldwide
The main advantage of trading using opposite PPG Industries and Kronos Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, Kronos Worldwide 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 Kronos Worldwide will offset losses from the drop in Kronos Worldwide's long position.| PPG Industries vs. Air Products and | PPG Industries vs. Linde plc Ordinary | PPG Industries vs. Ecolab Inc | PPG Industries vs. LyondellBasell Industries NV |
| Kronos Worldwide vs. Oil Dri | Kronos Worldwide vs. Quaker Chemical | Kronos Worldwide vs. Ecovyst | Kronos Worldwide vs. Minerals Technologies |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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