Correlation Between Chemtrade Logistics and Rubicon Organics

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

By analyzing existing cross correlation between Chemtrade Logistics Income and Rubicon Organics, you can compare the effects of market volatilities on Chemtrade Logistics and Rubicon Organics 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 Chemtrade Logistics with a short position of Rubicon Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemtrade Logistics and Rubicon Organics.

Diversification Opportunities for Chemtrade Logistics and Rubicon Organics

-0.75

Correlation Coefficient

Chemtrade Logistics  Rubicon Organics

Pay attention - limited upside

The 3 months correlation between Chemtrade and Rubicon is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Chemtrade Logistics Income and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics and Chemtrade Logistics 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 Chemtrade Logistics Income are associated (or correlated) with Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of Chemtrade Logistics i.e., Chemtrade Logistics and Rubicon Organics go up and down completely randomly.

Pair Corralation between Chemtrade Logistics and Rubicon Organics

Assuming the 90 days trading horizon Chemtrade Logistics Income is expected to generate 0.26 times more return on investment than Rubicon Organics. However, Chemtrade Logistics Income is 3.91 times less risky than Rubicon Organics. It trades about 0.16 of its potential returns per unit of risk. Rubicon Organics is currently generating about -0.02 per unit of risk. If you would invest  1,005  in Chemtrade Logistics Income on September 12, 2024 and sell it today you would earn a total of  134.00  from holding Chemtrade Logistics Income or generate 13.33% return on investment over 90 days.

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

Chemtrade Logistics Income  vs.  Rubicon Organics

Chemtrade Logistics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chemtrade Logistics Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Chemtrade Logistics sustained solid returns over the last few months and may actually be approaching a breakup point.

Rubicon Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubicon Organics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's primary indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Chemtrade Logistics and Rubicon Organics

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

The idea behind Chemtrade Logistics Income and Rubicon Organics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.