Correlation Between Sociedad Quimica and H B

Can any of the company-specific risk be diversified away by investing in both Sociedad Quimica and H B 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 H B 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 H B Fuller, you can compare the effects of market volatilities on Sociedad Quimica and H B 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 H B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sociedad Quimica and H B.

Diversification Opportunities for Sociedad Quimica and H B

0.05

Correlation Coefficient

Sociedad Quimica  H B

Significant diversification

The 3 months correlation between Sociedad and FUL is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sociedad Quimica y and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller 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 H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of Sociedad Quimica i.e., Sociedad Quimica and H B go up and down completely randomly.

Pair Corralation between Sociedad Quimica and H B

Considering the 90-day investment horizon Sociedad Quimica y is expected to generate 0.88 times more return on investment than H B. However, Sociedad Quimica y is 1.14 times less risky than H B. It trades about 0.13 of its potential returns per unit of risk. H B Fuller is currently generating about -0.24 per unit of risk. If you would invest  3,742  in Sociedad Quimica y on October 26, 2024 and sell it today you would earn a total of  164.00  from holding Sociedad Quimica y or generate 4.38% return on investment over 90 days.

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

Sociedad Quimica y  vs.  H B Fuller

Sociedad Quimica y

Risk-Adjusted Performance

0 of 100

Very Weak

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

H B Fuller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Sociedad Quimica and H B

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

The idea behind Sociedad Quimica y and H B Fuller 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.