Correlation Between AdvanSix and Asahi Kaisei

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

By analyzing existing cross correlation between AdvanSix and Asahi Kaisei Corp, you can compare the effects of market volatilities on AdvanSix and Asahi Kaisei 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 AdvanSix with a short position of Asahi Kaisei. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvanSix and Asahi Kaisei.

Diversification Opportunities for AdvanSix and Asahi Kaisei

-0.87

Correlation Coefficient

AdvanSix  Asahi Kaisei

Pay attention - limited upside

The 3 months correlation between AdvanSix and Asahi is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding AdvanSix and Asahi Kaisei Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Kaisei Corp and AdvanSix 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 AdvanSix are associated (or correlated) with Asahi Kaisei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Kaisei Corp has no effect on the direction of AdvanSix i.e., AdvanSix and Asahi Kaisei go up and down completely randomly.

Pair Corralation between AdvanSix and Asahi Kaisei

Given the investment horizon of 90 days AdvanSix is expected to under-perform the Asahi Kaisei. In addition to that, AdvanSix is 1.8 times more volatile than Asahi Kaisei Corp. It trades about -0.13 of its total potential returns per unit of risk. Asahi Kaisei Corp is currently generating about 0.08 per unit of volatility. If you would invest  1,377  in Asahi Kaisei Corp on December 30, 2024 and sell it today you would earn a total of  80.00  from holding Asahi Kaisei Corp or generate 5.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AdvanSix  vs.  Asahi Kaisei Corp

AdvanSix

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvanSix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Asahi Kaisei Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asahi Kaisei Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Asahi Kaisei is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AdvanSix and Asahi Kaisei

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

The idea behind AdvanSix and Asahi Kaisei Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.