Correlation Between Proficient Auto and Arkema SA

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

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

Diversification Opportunities for Proficient Auto and Arkema SA

-0.36

Correlation Coefficient

Proficient Auto  Arkema SA

Very good diversification

The 3 months correlation between Proficient and Arkema is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Proficient Auto Logistics, and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and Proficient Auto 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 Proficient Auto Logistics, are associated (or correlated) with Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA has no effect on the direction of Proficient Auto i.e., Proficient Auto and Arkema SA go up and down completely randomly.

Pair Corralation between Proficient Auto and Arkema SA

Considering the 90-day investment horizon Proficient Auto is expected to generate 1.21 times less return on investment than Arkema SA. In addition to that, Proficient Auto is 3.1 times more volatile than Arkema SA. It trades about 0.05 of its total potential returns per unit of risk. Arkema SA is currently generating about 0.21 per unit of volatility. If you would invest  7,303  in Arkema SA on December 30, 2024 and sell it today you would earn a total of  1,563  from holding Arkema SA or generate 21.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.32%
Values	Daily Returns

Proficient Auto Logistics,  vs.  Arkema SA

Proficient Auto Logi

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Proficient Auto Logistics, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Proficient Auto disclosed solid returns over the last few months and may actually be approaching a breakup point.

Arkema SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arkema SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Arkema SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Proficient Auto and Arkema SA

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

The idea behind Proficient Auto Logistics, and Arkema 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.