Correlation Between SIKA AG and Element Solutions
Can any of the company-specific risk be diversified away by investing in both SIKA AG and Element Solutions 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 SIKA AG and Element Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIKA AG UNSPADR and Element Solutions, you can compare the effects of market volatilities on SIKA AG and Element Solutions 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 SIKA AG with a short position of Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIKA AG and Element Solutions.
Diversification Opportunities for SIKA AG and Element Solutions
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SIKA and Element is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding SIKA AG UNSPADR and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions and SIKA AG 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 SIKA AG UNSPADR are associated (or correlated) with Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of SIKA AG i.e., SIKA AG and Element Solutions go up and down completely randomly.
Pair Corralation between SIKA AG and Element Solutions
Assuming the 90 days trading horizon SIKA AG UNSPADR is expected to generate 1.49 times more return on investment than Element Solutions. However, SIKA AG is 1.49 times more volatile than Element Solutions. It trades about -0.13 of its potential returns per unit of risk. Element Solutions is currently generating about -0.41 per unit of risk. If you would invest 2,420 in SIKA AG UNSPADR on September 24, 2024 and sell it today you would lose (140.00) from holding SIKA AG UNSPADR or give up 5.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIKA AG UNSPADR vs. Element Solutions
Performance |
| Timeline |
| SIKA AG UNSPADR |
| Element Solutions |
SIKA AG and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIKA AG and Element Solutions
The main advantage of trading using opposite SIKA AG and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIKA AG position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| SIKA AG vs. Linde plc | SIKA AG vs. Linde PLC | SIKA AG vs. Air Liquide SA | SIKA AG vs. The Sherwin Williams |
| Element Solutions vs. JD SPORTS FASH | Element Solutions vs. PLAYTIKA HOLDING DL 01 | Element Solutions vs. Live Nation Entertainment | Element Solutions vs. Ubisoft Entertainment SA |
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 Stocks Directory module to find actively traded stocks across global markets.
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