Correlation Between Element Solutions and Koppers Holdings
Can any of the company-specific risk be diversified away by investing in both Element Solutions and Koppers Holdings 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 Element Solutions and Koppers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and Koppers Holdings, you can compare the effects of market volatilities on Element Solutions and Koppers Holdings 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 Element Solutions with a short position of Koppers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and Koppers Holdings.
Diversification Opportunities for Element Solutions and Koppers Holdings
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Element and Koppers is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and Koppers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koppers Holdings and Element Solutions 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 Element Solutions are associated (or correlated) with Koppers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koppers Holdings has no effect on the direction of Element Solutions i.e., Element Solutions and Koppers Holdings go up and down completely randomly.
Pair Corralation between Element Solutions and Koppers Holdings
Considering the 90-day investment horizon Element Solutions is expected to generate 0.62 times more return on investment than Koppers Holdings. However, Element Solutions is 1.6 times less risky than Koppers Holdings. It trades about -0.03 of its potential returns per unit of risk. Koppers Holdings is currently generating about -0.06 per unit of risk. If you would invest 2,552 in Element Solutions on December 27, 2024 and sell it today you would lose (81.00) from holding Element Solutions or give up 3.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Element Solutions vs. Koppers Holdings
Performance |
Timeline |
Element Solutions |
Koppers Holdings |
Element Solutions and Koppers Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Element Solutions and Koppers Holdings
The main advantage of trading using opposite Element Solutions and Koppers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions position performs unexpectedly, Koppers Holdings 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 Koppers Holdings will offset losses from the drop in Koppers Holdings' long position.Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions vs. Minerals Technologies |
Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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