Correlation Between AirBoss Of and Arkema SA

Can any of the company-specific risk be diversified away by investing in both AirBoss Of and Arkema 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 AirBoss Of and Arkema SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AirBoss of America and Arkema SA ADR, you can compare the effects of market volatilities on AirBoss Of and Arkema 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 AirBoss Of with a short position of Arkema SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AirBoss Of and Arkema SA.

Diversification Opportunities for AirBoss Of and Arkema SA

0.45

Correlation Coefficient

AirBoss Of  Arkema SA

Very weak diversification

The 3 months correlation between AirBoss and Arkema is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding AirBoss of America and Arkema SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA ADR and AirBoss Of 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 AirBoss of America are associated (or correlated) with Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA ADR has no effect on the direction of AirBoss Of i.e., AirBoss Of and Arkema SA go up and down completely randomly.

Pair Corralation between AirBoss Of and Arkema SA

Assuming the 90 days horizon AirBoss of America is expected to under-perform the Arkema SA. In addition to that, AirBoss Of is 1.02 times more volatile than Arkema SA ADR. It trades about -0.1 of its total potential returns per unit of risk. Arkema SA ADR is currently generating about 0.07 per unit of volatility. If you would invest  8,061  in Arkema SA ADR on December 1, 2024 and sell it today you would earn a total of  239.00  from holding Arkema SA ADR or generate 2.96% return on investment over 90 days.

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

AirBoss of America  vs.  Arkema SA ADR

AirBoss of America

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AirBoss of America are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AirBoss Of is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Arkema SA ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arkema SA ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Arkema SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AirBoss Of and Arkema SA

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

The idea behind AirBoss of America and Arkema SA ADR 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.