Correlation Between Perimeter Solutions and Olin

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

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

Diversification Opportunities for Perimeter Solutions and Olin

0.31

Correlation Coefficient

Perimeter Solutions  Olin

Weak diversification

The 3 months correlation between Perimeter and Olin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Perimeter Solutions SA and Olin Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olin and Perimeter Solutions 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 Perimeter Solutions SA are associated (or correlated) with Olin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olin has no effect on the direction of Perimeter Solutions i.e., Perimeter Solutions and Olin go up and down completely randomly.

Pair Corralation between Perimeter Solutions and Olin

Considering the 90-day investment horizon Perimeter Solutions SA is expected to generate 1.15 times more return on investment than Olin. However, Perimeter Solutions is 1.15 times more volatile than Olin Corporation. It trades about 0.09 of its potential returns per unit of risk. Olin Corporation is currently generating about 0.03 per unit of risk. If you would invest  1,139  in Perimeter Solutions SA on September 4, 2024 and sell it today you would earn a total of  150.00  from holding Perimeter Solutions SA or generate 13.17% return on investment over 90 days.

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

Perimeter Solutions SA  vs.  Olin Corp.

Perimeter Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perimeter Solutions SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Perimeter Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Olin

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Olin Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Olin is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Perimeter Solutions and Olin

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

The idea behind Perimeter Solutions SA and Olin Corporation 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.