Correlation Between AGC and Arkema SA

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

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

Diversification Opportunities for AGC and Arkema SA

0.22

Correlation Coefficient

AGC  Arkema SA

Modest diversification

The 3 months correlation between AGC and Arkema is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding AGC Inc ADR and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and AGC 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 AGC Inc ADR 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 AGC i.e., AGC and Arkema SA go up and down completely randomly.

Pair Corralation between AGC and Arkema SA

If you would invest  570.00  in AGC Inc ADR on December 1, 2024 and sell it today you would earn a total of  78.00  from holding AGC Inc ADR or generate 13.68% return on investment over 90 days.

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

AGC Inc ADR  vs.  Arkema SA

AGC Inc ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AGC Inc ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, AGC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Arkema SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arkema SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Arkema SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AGC and Arkema SA

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

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.