Correlation Between Asia Carbon and Evonik Industries

Can any of the company-specific risk be diversified away by investing in both Asia Carbon and Evonik Industries 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 Evonik Industries 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 Evonik Industries AG, you can compare the effects of market volatilities on Asia Carbon and Evonik Industries 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 Evonik Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Carbon and Evonik Industries.

Diversification Opportunities for Asia Carbon and Evonik Industries

0.0

Correlation Coefficient

Asia Carbon  Evonik Industries

Pay attention - limited upside

The 3 months correlation between Asia and Evonik is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Asia Carbon Industries and Evonik Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evonik Industries 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 Evonik Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evonik Industries has no effect on the direction of Asia Carbon i.e., Asia Carbon and Evonik Industries go up and down completely randomly.

Pair Corralation between Asia Carbon and Evonik Industries

If you would invest  2,130  in Evonik Industries AG on October 12, 2024 and sell it today you would lose (380.00) from holding Evonik Industries AG or give up 17.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	66.26%
Values	Daily Returns

Asia Carbon Industries  vs.  Evonik Industries AG

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 current stock price disturbance, may contribute to short-term losses for the investors.

Evonik Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evonik Industries AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Asia Carbon and Evonik Industries

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

The idea behind Asia Carbon Industries and Evonik Industries AG 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.