Correlation Between BASF SE and Nutex Investments

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

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

Diversification Opportunities for BASF SE and Nutex Investments

0.0

Correlation Coefficient

BASF SE  Nutex Investments

Pay attention - limited upside

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

Pair Corralation between BASF SE and Nutex Investments

Assuming the 90 days trading horizon BASF SE is expected to generate 2.93 times less return on investment than Nutex Investments. But when comparing it to its historical volatility, BASF SE is 1.8 times less risky than Nutex Investments. It trades about 0.06 of its potential returns per unit of risk. Nutex Investments PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,945  in Nutex Investments PLC on September 15, 2024 and sell it today you would earn a total of  515.00  from holding Nutex Investments PLC or generate 26.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	44.44%
Values	Daily Returns

BASF SE  vs.  Nutex Investments PLC

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.

Nutex Investments PLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nutex Investments PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Nutex Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BASF SE and Nutex Investments

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

The idea behind BASF SE and Nutex Investments PLC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.