Correlation Between Ams AG and Westlake Chemical

Can any of the company-specific risk be diversified away by investing in both Ams AG and Westlake Chemical 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 Ams AG and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ams AG and Westlake Chemical Corp, you can compare the effects of market volatilities on Ams AG and Westlake Chemical 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 Ams AG with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ams AG and Westlake Chemical.

Diversification Opportunities for Ams AG and Westlake Chemical

0.29

Correlation Coefficient

Ams AG  Westlake Chemical

Modest diversification

The 3 months correlation between Ams and Westlake is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ams AG and Westlake Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical Corp and Ams 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 Ams AG are associated (or correlated) with Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical Corp has no effect on the direction of Ams AG i.e., Ams AG and Westlake Chemical go up and down completely randomly.

Pair Corralation between Ams AG and Westlake Chemical

Assuming the 90 days trading horizon Ams AG is expected to generate 75.23 times more return on investment than Westlake Chemical. However, Ams AG is 75.23 times more volatile than Westlake Chemical Corp. It trades about 0.11 of its potential returns per unit of risk. Westlake Chemical Corp is currently generating about -0.15 per unit of risk. If you would invest  824.00  in Ams AG on September 15, 2024 and sell it today you would lose (107.00) from holding Ams AG or give up 12.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Ams AG  vs.  Westlake Chemical Corp

Ams AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ams AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ams AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Westlake Chemical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westlake Chemical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ams AG and Westlake Chemical

The main advantage of trading using opposite Ams AG and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ams AG position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.

The idea behind Ams AG and Westlake Chemical 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.