Correlation Between Rayonier Advanced and Huntsman

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

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

Diversification Opportunities for Rayonier Advanced and Huntsman

-0.06

Correlation Coefficient

Rayonier Advanced  Huntsman

Good diversification

The 3 months correlation between Rayonier and Huntsman is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier Advanced Materials and Huntsman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntsman and Rayonier Advanced 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 Rayonier Advanced Materials are associated (or correlated) with Huntsman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntsman has no effect on the direction of Rayonier Advanced i.e., Rayonier Advanced and Huntsman go up and down completely randomly.

Pair Corralation between Rayonier Advanced and Huntsman

Given the investment horizon of 90 days Rayonier Advanced Materials is expected to under-perform the Huntsman. In addition to that, Rayonier Advanced is 1.19 times more volatile than Huntsman. It trades about -0.48 of its total potential returns per unit of risk. Huntsman is currently generating about -0.26 per unit of volatility. If you would invest  1,968  in Huntsman on September 26, 2024 and sell it today you would lose (155.00) from holding Huntsman or give up 7.88% of portfolio value over 90 days.

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

Rayonier Advanced Materials  vs.  Huntsman

Rayonier Advanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rayonier Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Huntsman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huntsman has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Rayonier Advanced and Huntsman

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

The idea behind Rayonier Advanced Materials and Huntsman 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.