Correlation Between BASF SE and Chemtrade Logistics

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

By analyzing existing cross correlation between BASF SE NA and Chemtrade Logistics Income, you can compare the effects of market volatilities on BASF SE and Chemtrade Logistics 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 BASF SE with a short position of Chemtrade Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and Chemtrade Logistics.

Diversification Opportunities for BASF SE and Chemtrade Logistics

-0.31

Correlation Coefficient

BASF SE  Chemtrade Logistics

Very good diversification

The 3 months correlation between BASF and Chemtrade is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE NA and Chemtrade Logistics Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemtrade Logistics and BASF SE 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 BASF SE NA are associated (or correlated) with Chemtrade Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemtrade Logistics has no effect on the direction of BASF SE i.e., BASF SE and Chemtrade Logistics go up and down completely randomly.

Pair Corralation between BASF SE and Chemtrade Logistics

Assuming the 90 days horizon BASF SE NA is expected to under-perform the Chemtrade Logistics. In addition to that, BASF SE is 1.78 times more volatile than Chemtrade Logistics Income. It trades about -0.05 of its total potential returns per unit of risk. Chemtrade Logistics Income is currently generating about 0.05 per unit of volatility. If you would invest  750.00  in Chemtrade Logistics Income on September 19, 2024 and sell it today you would earn a total of  29.00  from holding Chemtrade Logistics Income or generate 3.87% return on investment over 90 days.

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

BASF SE NA  vs.  Chemtrade Logistics Income

BASF SE NA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BASF SE NA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Chemtrade Logistics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chemtrade Logistics Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Chemtrade Logistics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BASF SE and Chemtrade Logistics

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

The idea behind BASF SE NA and Chemtrade Logistics Income 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 Commodity Directory module to find actively traded commodities issued by global exchanges.