Correlation Between BASF SE and A Schulman

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

By analyzing existing cross correlation between BASF SE NA and A Schulman, you can compare the effects of market volatilities on BASF SE and A Schulman 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 A Schulman. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and A Schulman.

Diversification Opportunities for BASF SE and A Schulman

0.27

Correlation Coefficient

BASF SE  A Schulman

Modest diversification

The 3 months correlation between BASF and SLMNP is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE NA and A Schulman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Schulman 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 NA are associated (or correlated) with A Schulman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Schulman has no effect on the direction of BASF SE i.e., BASF SE and A Schulman go up and down completely randomly.

Pair Corralation between BASF SE and A Schulman

Assuming the 90 days horizon BASF SE NA is expected to generate 1.41 times more return on investment than A Schulman. However, BASF SE is 1.41 times more volatile than A Schulman. It trades about 0.1 of its potential returns per unit of risk. A Schulman is currently generating about 0.05 per unit of risk. If you would invest  4,440  in BASF SE NA on December 28, 2024 and sell it today you would earn a total of  867.00  from holding BASF SE NA or generate 19.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.33%
Values	Daily Returns

BASF SE NA  vs.  A Schulman

BASF SE NA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BASF SE NA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BASF SE reported solid returns over the last few months and may actually be approaching a breakup point.

A Schulman

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in A Schulman are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, A Schulman may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BASF SE and A Schulman

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

The idea behind BASF SE NA and A Schulman 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.