Correlation Between Sika AG and Albemarle Corp
Can any of the company-specific risk be diversified away by investing in both Sika AG and Albemarle Corp 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 Albemarle Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sika AG and Albemarle Corp, you can compare the effects of market volatilities on Sika AG and Albemarle Corp 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 Albemarle Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sika AG and Albemarle Corp.
Diversification Opportunities for Sika AG and Albemarle Corp
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sika and Albemarle is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sika AG and Albemarle Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle Corp 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 are associated (or correlated) with Albemarle Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle Corp has no effect on the direction of Sika AG i.e., Sika AG and Albemarle Corp go up and down completely randomly.
Pair Corralation between Sika AG and Albemarle Corp
Assuming the 90 days horizon Sika AG is expected to under-perform the Albemarle Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sika AG is 1.23 times less risky than Albemarle Corp. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Albemarle Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,814 in Albemarle Corp on August 28, 2024 and sell it today you would earn a total of 865.00 from holding Albemarle Corp or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sika AG vs. Albemarle Corp
Performance |
| Timeline |
| Sika AG |
| Albemarle Corp |
Sika AG and Albemarle Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sika AG and Albemarle Corp
The main advantage of trading using opposite Sika AG and Albemarle Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sika AG position performs unexpectedly, Albemarle Corp 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 Albemarle Corp will offset losses from the drop in Albemarle Corp's long position.The idea behind Sika AG and Albemarle Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Albemarle Corp vs. Linde plc Ordinary | Albemarle Corp vs. Air Products and | Albemarle Corp vs. Dupont De Nemours | Albemarle Corp vs. Sociedad Quimica y |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |