Correlation Between Solvay SA and Lsb Industries
Can any of the company-specific risk be diversified away by investing in both Solvay SA and Lsb Industries 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 Solvay SA and Lsb Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solvay SA ADR and Lsb Industries, you can compare the effects of market volatilities on Solvay SA and Lsb Industries 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 Solvay SA with a short position of Lsb Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvay SA and Lsb Industries.
Diversification Opportunities for Solvay SA and Lsb Industries
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Solvay and Lsb is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA ADR and Lsb Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsb Industries and Solvay SA 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 Solvay SA ADR are associated (or correlated) with Lsb Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsb Industries has no effect on the direction of Solvay SA i.e., Solvay SA and Lsb Industries go up and down completely randomly.
Pair Corralation between Solvay SA and Lsb Industries
Assuming the 90 days horizon Solvay SA ADR is expected to under-perform the Lsb Industries. In addition to that, Solvay SA is 1.24 times more volatile than Lsb Industries. It trades about -0.3 of its total potential returns per unit of risk. Lsb Industries is currently generating about 0.11 per unit of volatility. If you would invest 842.00 in Lsb Industries on September 3, 2024 and sell it today you would earn a total of 41.00 from holding Lsb Industries or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solvay SA ADR vs. Lsb Industries
Performance |
| Timeline |
| Solvay SA ADR |
| Lsb Industries |
Solvay SA and Lsb Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvay SA and Lsb Industries
The main advantage of trading using opposite Solvay SA and Lsb Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay SA position performs unexpectedly, Lsb Industries 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 Lsb Industries will offset losses from the drop in Lsb Industries' long position.| Solvay SA vs. Haydale Graphene Industries | Solvay SA vs. Versarien plc | Solvay SA vs. NanoXplore | Solvay SA vs. G6 Materials Corp |
| Lsb Industries vs. Green Plains Renewable | Lsb Industries vs. AdvanSix | Lsb Industries vs. Tronox Holdings PLC | Lsb Industries vs. Methanex |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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