Correlation Between AKKO Invest and BASF SE

Can any of the company-specific risk be diversified away by investing in both AKKO Invest and BASF SE 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 AKKO Invest and BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AKKO Invest Nyrt and BASF SE, you can compare the effects of market volatilities on AKKO Invest and BASF SE 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 AKKO Invest with a short position of BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKKO Invest and BASF SE.

Diversification Opportunities for AKKO Invest and BASF SE

-0.25

Correlation Coefficient

AKKO Invest  BASF SE

Very good diversification

The 3 months correlation between AKKO and BASF is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding AKKO Invest Nyrt and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE and AKKO Invest 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 AKKO Invest Nyrt are associated (or correlated) with BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of AKKO Invest i.e., AKKO Invest and BASF SE go up and down completely randomly.

Pair Corralation between AKKO Invest and BASF SE

Assuming the 90 days trading horizon AKKO Invest Nyrt is expected to generate 1.08 times more return on investment than BASF SE. However, AKKO Invest is 1.08 times more volatile than BASF SE. It trades about 0.08 of its potential returns per unit of risk. BASF SE is currently generating about 0.08 per unit of risk. If you would invest  22,000  in AKKO Invest Nyrt on September 14, 2024 and sell it today you would earn a total of  12,500  from holding AKKO Invest Nyrt or generate 56.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.62%
Values	Daily Returns

AKKO Invest Nyrt  vs.  BASF SE

AKKO Invest Nyrt

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AKKO Invest Nyrt are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AKKO Invest unveiled solid returns over the last few months and may actually be approaching a breakup point.

BASF SE

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days BASF SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady basic indicators, BASF SE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AKKO Invest and BASF SE

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

The idea behind AKKO Invest Nyrt and BASF SE 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.