Correlation Between ARDAGH METAL and Sociedad Química

Can any of the company-specific risk be diversified away by investing in both ARDAGH METAL and Sociedad Química 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 ARDAGH METAL and Sociedad Química into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and Sociedad Qumica y, you can compare the effects of market volatilities on ARDAGH METAL and Sociedad Química 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 ARDAGH METAL with a short position of Sociedad Química. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and Sociedad Química.

Diversification Opportunities for ARDAGH METAL and Sociedad Química

0.21

Correlation Coefficient

ARDAGH METAL  Sociedad Química

Modest diversification

The 3 months correlation between ARDAGH and Sociedad is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and Sociedad Qumica y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Qumica y and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 are associated (or correlated) with Sociedad Química. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Qumica y has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and Sociedad Química go up and down completely randomly.

Pair Corralation between ARDAGH METAL and Sociedad Química

Assuming the 90 days horizon ARDAGH METAL PACDL 0001 is expected to generate 1.06 times more return on investment than Sociedad Química. However, ARDAGH METAL is 1.06 times more volatile than Sociedad Qumica y. It trades about 0.02 of its potential returns per unit of risk. Sociedad Qumica y is currently generating about -0.01 per unit of risk. If you would invest  280.00  in ARDAGH METAL PACDL 0001 on October 8, 2024 and sell it today you would earn a total of  2.00  from holding ARDAGH METAL PACDL 0001 or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ARDAGH METAL PACDL 0001  vs.  Sociedad Qumica y

ARDAGH METAL PACDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARDAGH METAL PACDL 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sociedad Qumica y

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sociedad Qumica y has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sociedad Química is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ARDAGH METAL and Sociedad Química

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

The idea behind ARDAGH METAL PACDL 0001 and Sociedad Qumica y 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.