Correlation Between LyondellBasell Industries and H B

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

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

Diversification Opportunities for LyondellBasell Industries and H B

0.1

Correlation Coefficient

LyondellBasell Industries  H B

Average diversification

The 3 months correlation between LyondellBasell and FUL is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding LyondellBasell Industries NV and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller and LyondellBasell 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 LyondellBasell Industries NV are associated (or correlated) with H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of LyondellBasell Industries i.e., LyondellBasell Industries and H B go up and down completely randomly.

Pair Corralation between LyondellBasell Industries and H B

Considering the 90-day investment horizon LyondellBasell Industries NV is expected to generate 0.78 times more return on investment than H B. However, LyondellBasell Industries NV is 1.28 times less risky than H B. It trades about -0.02 of its potential returns per unit of risk. H B Fuller is currently generating about -0.15 per unit of risk. If you would invest  7,191  in LyondellBasell Industries NV on December 30, 2024 and sell it today you would lose (209.00) from holding LyondellBasell Industries NV or give up 2.91% of portfolio value over 90 days.

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

LyondellBasell Industries NV  vs.  H B Fuller

LyondellBasell Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days LyondellBasell Industries NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LyondellBasell Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with LyondellBasell Industries and H B

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

The idea behind LyondellBasell Industries NV and H B Fuller 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.