Correlation Between H B and Trinseo SA

Can any of the company-specific risk be diversified away by investing in both H B and Trinseo SA 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 Trinseo SA 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 Trinseo SA, you can compare the effects of market volatilities on H B and Trinseo SA 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 Trinseo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of H B and Trinseo SA.

Diversification Opportunities for H B and Trinseo SA

-0.12

Correlation Coefficient

H B  Trinseo SA

Good diversification

The 3 months correlation between FUL and Trinseo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller and Trinseo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinseo SA 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 Trinseo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinseo SA has no effect on the direction of H B i.e., H B and Trinseo SA go up and down completely randomly.

Pair Corralation between H B and Trinseo SA

Considering the 90-day investment horizon H B Fuller is expected to under-perform the Trinseo SA. But the stock apears to be less risky and, when comparing its historical volatility, H B Fuller is 4.41 times less risky than Trinseo SA. The stock trades about -0.38 of its potential returns per unit of risk. The Trinseo SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  414.00  in Trinseo SA on December 2, 2024 and sell it today you would earn a total of  78.00  from holding Trinseo SA or generate 18.84% return on investment over 90 days.

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

H B Fuller  vs.  Trinseo SA

H B Fuller

Risk-Adjusted Performance

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Trinseo SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trinseo SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Trinseo SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with H B and Trinseo SA

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

The idea behind H B Fuller and Trinseo SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.