Correlation Between Kronos Worldwide and PPG Industries

Can any of the company-specific risk be diversified away by investing in both Kronos Worldwide and PPG Industries 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 Kronos Worldwide and PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kronos Worldwide and PPG Industries, you can compare the effects of market volatilities on Kronos Worldwide and PPG Industries 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 Kronos Worldwide with a short position of PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kronos Worldwide and PPG Industries.

Diversification Opportunities for Kronos Worldwide and PPG Industries

0.69

Correlation Coefficient

Kronos Worldwide  PPG Industries

Poor diversification

The 3 months correlation between Kronos and PPG is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Worldwide and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries and Kronos Worldwide 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 Kronos Worldwide are associated (or correlated) with PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of Kronos Worldwide i.e., Kronos Worldwide and PPG Industries go up and down completely randomly.

Pair Corralation between Kronos Worldwide and PPG Industries

Considering the 90-day investment horizon Kronos Worldwide is expected to under-perform the PPG Industries. In addition to that, Kronos Worldwide is 1.36 times more volatile than PPG Industries. It trades about -0.16 of its total potential returns per unit of risk. PPG Industries is currently generating about -0.07 per unit of volatility. If you would invest  12,053  in PPG Industries on December 26, 2024 and sell it today you would lose (860.00) from holding PPG Industries or give up 7.14% of portfolio value over 90 days.

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

Kronos Worldwide  vs.  PPG Industries

Kronos Worldwide

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kronos Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

PPG Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days PPG Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Kronos Worldwide and PPG Industries

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

The idea behind Kronos Worldwide and PPG Industries 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.