Correlation Between Sociedad Quimica and Northern Technologies
Can any of the company-specific risk be diversified away by investing in both Sociedad Quimica and Northern Technologies 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 Quimica and Northern Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sociedad Quimica y and Northern Technologies, you can compare the effects of market volatilities on Sociedad Quimica and Northern Technologies 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 Quimica with a short position of Northern Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sociedad Quimica and Northern Technologies.
Diversification Opportunities for Sociedad Quimica and Northern Technologies
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sociedad and Northern is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sociedad Quimica y and Northern Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Technologies and Sociedad Quimica 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 Quimica y are associated (or correlated) with Northern Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Technologies has no effect on the direction of Sociedad Quimica i.e., Sociedad Quimica and Northern Technologies go up and down completely randomly.
Pair Corralation between Sociedad Quimica and Northern Technologies
Considering the 90-day investment horizon Sociedad Quimica is expected to generate 52.43 times less return on investment than Northern Technologies. But when comparing it to its historical volatility, Sociedad Quimica y is 1.19 times less risky than Northern Technologies. It trades about 0.0 of its potential returns per unit of risk. Northern Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,252 in Northern Technologies on August 24, 2024 and sell it today you would earn a total of 172.00 from holding Northern Technologies or generate 13.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sociedad Quimica y vs. Northern Technologies
Performance |
| Timeline |
| Sociedad Quimica y |
| Northern Technologies |
Sociedad Quimica and Northern Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sociedad Quimica and Northern Technologies
The main advantage of trading using opposite Sociedad Quimica and Northern Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sociedad Quimica position performs unexpectedly, Northern Technologies 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 Northern Technologies will offset losses from the drop in Northern Technologies' long position.| Sociedad Quimica vs. Linde plc Ordinary | Sociedad Quimica vs. Air Products and | Sociedad Quimica vs. Sherwin Williams Co | Sociedad Quimica vs. Albemarle Corp |
| Northern Technologies vs. Innospec | Northern Technologies vs. H B Fuller | Northern Technologies vs. Quaker Chemical | Northern Technologies 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |