Correlation Between H B and Sociedad Quimica

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

By analyzing existing cross correlation between H B Fuller and Sociedad Quimica y, you can compare the effects of market volatilities on H B and Sociedad Quimica 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 H B with a short position of Sociedad Quimica. Check out your portfolio center. Please also check ongoing floating volatility patterns of H B and Sociedad Quimica.

Diversification Opportunities for H B and Sociedad Quimica

0.05

Correlation Coefficient

H B  Sociedad Quimica

Significant diversification

The 3 months correlation between FUL and Sociedad is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller and Sociedad Quimica y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Quimica y and H B 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 H B Fuller are associated (or correlated) with Sociedad Quimica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Quimica y has no effect on the direction of H B i.e., H B and Sociedad Quimica go up and down completely randomly.

Pair Corralation between H B and Sociedad Quimica

Considering the 90-day investment horizon H B Fuller is expected to under-perform the Sociedad Quimica. But the stock apears to be less risky and, when comparing its historical volatility, H B Fuller is 1.3 times less risky than Sociedad Quimica. The stock trades about -0.18 of its potential returns per unit of risk. The Sociedad Quimica y is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  4,203  in Sociedad Quimica y on October 26, 2024 and sell it today you would lose (297.00) from holding Sociedad Quimica y or give up 7.07% of portfolio value over 90 days.

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

H B Fuller  vs.  Sociedad Quimica y

H B Fuller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sociedad Quimica y

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sociedad Quimica y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Sociedad Quimica is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with H B and Sociedad Quimica

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

The idea behind H B Fuller and Sociedad Quimica y 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.