Correlation Between Valhi and AdvanSix

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

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

Diversification Opportunities for Valhi and AdvanSix

0.65

Correlation Coefficient

Valhi  AdvanSix

Poor diversification

The 3 months correlation between Valhi and AdvanSix is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Valhi Inc and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix and Valhi 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 Valhi Inc are associated (or correlated) with AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of Valhi i.e., Valhi and AdvanSix go up and down completely randomly.

Pair Corralation between Valhi and AdvanSix

Considering the 90-day investment horizon Valhi Inc is expected to under-perform the AdvanSix. In addition to that, Valhi is 1.26 times more volatile than AdvanSix. It trades about -0.14 of its total potential returns per unit of risk. AdvanSix is currently generating about -0.12 per unit of volatility. If you would invest  2,783  in AdvanSix on December 29, 2024 and sell it today you would lose (477.00) from holding AdvanSix or give up 17.14% of portfolio value over 90 days.

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

Valhi Inc  vs.  AdvanSix

Valhi Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valhi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical 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.

AdvanSix

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvanSix 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 forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Valhi and AdvanSix

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

The idea behind Valhi Inc and AdvanSix 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.