Correlation Between WESTLAKE CHEMICAL and KHD Humboldt
Can any of the company-specific risk be diversified away by investing in both WESTLAKE CHEMICAL and KHD Humboldt 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 KHD Humboldt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEMICAL and KHD Humboldt Wedag, you can compare the effects of market volatilities on WESTLAKE CHEMICAL and KHD Humboldt 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 KHD Humboldt. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE CHEMICAL and KHD Humboldt.
Diversification Opportunities for WESTLAKE CHEMICAL and KHD Humboldt
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WESTLAKE and KHD is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEMICAL and KHD Humboldt Wedag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KHD Humboldt Wedag 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 KHD Humboldt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KHD Humboldt Wedag has no effect on the direction of WESTLAKE CHEMICAL i.e., WESTLAKE CHEMICAL and KHD Humboldt go up and down completely randomly.
Pair Corralation between WESTLAKE CHEMICAL and KHD Humboldt
Assuming the 90 days trading horizon WESTLAKE CHEMICAL is expected to generate 0.66 times more return on investment than KHD Humboldt. However, WESTLAKE CHEMICAL is 1.51 times less risky than KHD Humboldt. It trades about 0.02 of its potential returns per unit of risk. KHD Humboldt Wedag is currently generating about -0.23 per unit of risk. If you would invest 12,149 in WESTLAKE CHEMICAL on August 31, 2024 and sell it today you would earn a total of 51.00 from holding WESTLAKE CHEMICAL or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESTLAKE CHEMICAL vs. KHD Humboldt Wedag
Performance |
| Timeline |
| WESTLAKE CHEMICAL |
| KHD Humboldt Wedag |
WESTLAKE CHEMICAL and KHD Humboldt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTLAKE CHEMICAL and KHD Humboldt
The main advantage of trading using opposite WESTLAKE CHEMICAL and KHD Humboldt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE CHEMICAL position performs unexpectedly, KHD Humboldt 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 KHD Humboldt will offset losses from the drop in KHD Humboldt's long position.| WESTLAKE CHEMICAL vs. SIVERS SEMICONDUCTORS AB | WESTLAKE CHEMICAL vs. Darden Restaurants | WESTLAKE CHEMICAL vs. Reliance Steel Aluminum | WESTLAKE CHEMICAL vs. Q2M Managementberatung AG |
| KHD Humboldt vs. GALENA MINING LTD | KHD Humboldt vs. Tower One Wireless | KHD Humboldt vs. Verizon Communications | KHD Humboldt vs. MCEWEN MINING INC |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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