Correlation Between Sociedad Quimica and Ashland Global

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

By analyzing existing cross correlation between Sociedad Quimica y and Ashland Global Holdings, you can compare the effects of market volatilities on Sociedad Quimica and Ashland Global 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 Sociedad Quimica with a short position of Ashland Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sociedad Quimica and Ashland Global.

Diversification Opportunities for Sociedad Quimica and Ashland Global

-0.58

Correlation Coefficient

Sociedad Quimica  Ashland Global

Excellent diversification

The 3 months correlation between Sociedad and Ashland is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sociedad Quimica y and Ashland Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashland Global Holdings and Sociedad Quimica 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 Sociedad Quimica y are associated (or correlated) with Ashland Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashland Global Holdings has no effect on the direction of Sociedad Quimica i.e., Sociedad Quimica and Ashland Global go up and down completely randomly.

Pair Corralation between Sociedad Quimica and Ashland Global

Considering the 90-day investment horizon Sociedad Quimica y is expected to generate 1.11 times more return on investment than Ashland Global. However, Sociedad Quimica is 1.11 times more volatile than Ashland Global Holdings. It trades about 0.15 of its potential returns per unit of risk. Ashland Global Holdings is currently generating about -0.17 per unit of risk. If you would invest  3,728  in Sociedad Quimica y on December 20, 2024 and sell it today you would earn a total of  812.00  from holding Sociedad Quimica y or generate 21.78% return on investment over 90 days.

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

Sociedad Quimica y  vs.  Ashland Global Holdings

Sociedad Quimica y

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sociedad Quimica y are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Sociedad Quimica displayed solid returns over the last few months and may actually be approaching a breakup point.

Ashland Global Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashland Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Sociedad Quimica and Ashland Global

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

The idea behind Sociedad Quimica y and Ashland Global Holdings 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.