Correlation Between Orbia AdvanceSAB and Solvay SA

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

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

Diversification Opportunities for Orbia AdvanceSAB and Solvay SA

0.42

Correlation Coefficient

Orbia AdvanceSAB  Solvay SA

Very weak diversification

The 3 months correlation between Orbia and Solvay is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Orbia Advance and Solvay SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay SA and Orbia AdvanceSAB 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 Orbia Advance are associated (or correlated) with Solvay SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay SA has no effect on the direction of Orbia AdvanceSAB i.e., Orbia AdvanceSAB and Solvay SA go up and down completely randomly.

Pair Corralation between Orbia AdvanceSAB and Solvay SA

Assuming the 90 days horizon Orbia AdvanceSAB is expected to generate 2.0 times less return on investment than Solvay SA. In addition to that, Orbia AdvanceSAB is 1.24 times more volatile than Solvay SA. It trades about 0.04 of its total potential returns per unit of risk. Solvay SA is currently generating about 0.1 per unit of volatility. If you would invest  3,139  in Solvay SA on December 29, 2024 and sell it today you would earn a total of  490.00  from holding Solvay SA or generate 15.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.72%
Values	Daily Returns

Orbia Advance  vs.  Solvay SA

Orbia AdvanceSAB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orbia Advance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Orbia AdvanceSAB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Solvay SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solvay SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Solvay SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orbia AdvanceSAB and Solvay SA

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

The idea behind Orbia Advance and Solvay 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 Stocks Directory module to find actively traded stocks across global markets.