Correlation Between Sika AG and Livent Corp

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

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

Diversification Opportunities for Sika AG and Livent Corp

0.0

Correlation Coefficient

Sika AG  Livent Corp

Pay attention - limited upside

The 3 months correlation between Sika and Livent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sika AG and Livent Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livent Corp and Sika AG 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 Sika AG are associated (or correlated) with Livent Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livent Corp has no effect on the direction of Sika AG i.e., Sika AG and Livent Corp go up and down completely randomly.

Pair Corralation between Sika AG and Livent Corp

If you would invest  25,319  in Sika AG on December 2, 2024 and sell it today you would earn a total of  112.00  from holding Sika AG or generate 0.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sika AG  vs.  Livent Corp

Sika AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sika AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sika AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Livent Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Livent Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Livent Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sika AG and Livent Corp

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

The idea behind Sika AG and Livent Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.