Correlation Between Lsb Industries and Celanese

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

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

Diversification Opportunities for Lsb Industries and Celanese

0.75

Correlation Coefficient

Lsb Industries  Celanese

Poor diversification

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

Pair Corralation between Lsb Industries and Celanese

Considering the 90-day investment horizon Lsb Industries is expected to generate 0.91 times more return on investment than Celanese. However, Lsb Industries is 1.1 times less risky than Celanese. It trades about -0.02 of its potential returns per unit of risk. Celanese is currently generating about -0.05 per unit of risk. If you would invest  758.00  in Lsb Industries on December 27, 2024 and sell it today you would lose (58.00) from holding Lsb Industries or give up 7.65% of portfolio value over 90 days.

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

Lsb Industries  vs.  Celanese

Lsb Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lsb Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lsb Industries is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Celanese

Risk-Adjusted Performance

Very Weak

Over the last 90 days Celanese has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lsb Industries and Celanese

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

The idea behind Lsb Industries and Celanese 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.