Correlation Between WESTLAKE CHEMICAL and Orange SA
Can any of the company-specific risk be diversified away by investing in both WESTLAKE CHEMICAL and Orange SA 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 WESTLAKE CHEMICAL and Orange SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEMICAL and Orange SA, you can compare the effects of market volatilities on WESTLAKE CHEMICAL and Orange SA 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 WESTLAKE CHEMICAL with a short position of Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE CHEMICAL and Orange SA.
Diversification Opportunities for WESTLAKE CHEMICAL and Orange SA
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between WESTLAKE and Orange is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEMICAL and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA and WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL are associated (or correlated) with Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA has no effect on the direction of WESTLAKE CHEMICAL i.e., WESTLAKE CHEMICAL and Orange SA go up and down completely randomly.
Pair Corralation between WESTLAKE CHEMICAL and Orange SA
Assuming the 90 days trading horizon WESTLAKE CHEMICAL is expected to generate 1.81 times more return on investment than Orange SA. However, WESTLAKE CHEMICAL is 1.81 times more volatile than Orange SA. It trades about 0.03 of its potential returns per unit of risk. Orange SA is currently generating about 0.04 per unit of risk. If you would invest 9,894 in WESTLAKE CHEMICAL on September 3, 2024 and sell it today you would earn a total of 2,306 from holding WESTLAKE CHEMICAL or generate 23.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.81% |
| Values | Daily Returns |
WESTLAKE CHEMICAL vs. Orange SA
Performance |
| Timeline |
| WESTLAKE CHEMICAL |
| Orange SA |
WESTLAKE CHEMICAL and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTLAKE CHEMICAL and Orange SA
The main advantage of trading using opposite WESTLAKE CHEMICAL and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE CHEMICAL position performs unexpectedly, Orange SA 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 Orange SA will offset losses from the drop in Orange SA's long position.| WESTLAKE CHEMICAL vs. Check Point Software | WESTLAKE CHEMICAL vs. AXWAY SOFTWARE EO | WESTLAKE CHEMICAL vs. NTG Nordic Transport | WESTLAKE CHEMICAL vs. FORMPIPE SOFTWARE AB |
| Orange SA vs. MUTUIONLINE | Orange SA vs. BOS BETTER ONLINE | Orange SA vs. SEKISUI CHEMICAL | Orange SA vs. WESTLAKE CHEMICAL |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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