Correlation Between Arkema SA and AirBoss Of

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

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

Diversification Opportunities for Arkema SA and AirBoss Of

0.45

Correlation Coefficient

Arkema SA  AirBoss Of

Very weak diversification

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

Pair Corralation between Arkema SA and AirBoss Of

Assuming the 90 days horizon Arkema SA ADR is expected to generate 0.98 times more return on investment than AirBoss Of. However, Arkema SA ADR is 1.02 times less risky than AirBoss Of. It trades about 0.07 of its potential returns per unit of risk. AirBoss of America is currently generating about -0.1 per unit of risk. 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

Arkema SA ADR  vs.  AirBoss of America

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.

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.

Pair Trading with Arkema SA and AirBoss Of

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

The idea behind Arkema SA ADR and AirBoss of America 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.