Correlation Between Sociedad Qumica and BASF SE
Can any of the company-specific risk be diversified away by investing in both Sociedad Qumica and BASF SE 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 Sociedad Qumica and BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sociedad Qumica y and BASF SE, you can compare the effects of market volatilities on Sociedad Qumica and BASF SE 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 Sociedad Qumica with a short position of BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sociedad Qumica and BASF SE.
Diversification Opportunities for Sociedad Qumica and BASF SE
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sociedad and BASF is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sociedad Qumica y and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE and Sociedad Qumica 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 Sociedad Qumica y are associated (or correlated) with BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of Sociedad Qumica i.e., Sociedad Qumica and BASF SE go up and down completely randomly.
Pair Corralation between Sociedad Qumica and BASF SE
Assuming the 90 days horizon Sociedad Qumica y is expected to under-perform the BASF SE. In addition to that, Sociedad Qumica is 2.09 times more volatile than BASF SE. It trades about -0.02 of its total potential returns per unit of risk. BASF SE is currently generating about 0.03 per unit of volatility. If you would invest 3,998 in BASF SE on November 1, 2024 and sell it today you would earn a total of 691.00 from holding BASF SE or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Sociedad Qumica y vs. BASF SE
Performance |
| Timeline |
| Sociedad Qumica y |
| BASF SE |
Sociedad Qumica and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sociedad Qumica and BASF SE
The main advantage of trading using opposite Sociedad Qumica and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sociedad Qumica position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| Sociedad Qumica vs. Playa Hotels Resorts | Sociedad Qumica vs. LG Display Co | Sociedad Qumica vs. ARDAGH METAL PACDL 0001 | Sociedad Qumica vs. ePlay Digital |
| BASF SE vs. Allianz SE | BASF SE vs. Siemens Aktiengesellschaft | BASF SE vs. Bayer AG NA | BASF SE vs. SAP SE |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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