Correlation Between Asia Carbon and Arkema SA

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

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

Diversification Opportunities for Asia Carbon and Arkema SA

0.0

Correlation Coefficient

Asia Carbon  Arkema SA

Pay attention - limited upside

The 3 months correlation between Asia and Arkema is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Asia Carbon Industries and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and Asia Carbon 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 Asia Carbon Industries 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 has no effect on the direction of Asia Carbon i.e., Asia Carbon and Arkema SA go up and down completely randomly.

Pair Corralation between Asia Carbon and Arkema SA

If you would invest  8,693  in Arkema SA on September 3, 2024 and sell it today you would earn a total of  147.00  from holding Arkema SA or generate 1.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	63.64%
Values	Daily Returns

Asia Carbon Industries  vs.  Arkema SA

Asia Carbon Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Carbon Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Asia Carbon is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Arkema SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Asia Carbon and Arkema SA

The main advantage of trading using opposite Asia Carbon and Arkema SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Carbon 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 Asia Carbon Industries and Arkema SA 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.