Correlation Between BASF SE and Ganfeng Lithium
Can any of the company-specific risk be diversified away by investing in both BASF SE and Ganfeng Lithium 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 Ganfeng Lithium 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 Ganfeng Lithium Co, you can compare the effects of market volatilities on BASF SE and Ganfeng Lithium 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 Ganfeng Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and Ganfeng Lithium.
Diversification Opportunities for BASF SE and Ganfeng Lithium
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BASF and Ganfeng is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE NA and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium 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 Ganfeng Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganfeng Lithium has no effect on the direction of BASF SE i.e., BASF SE and Ganfeng Lithium go up and down completely randomly.
Pair Corralation between BASF SE and Ganfeng Lithium
Assuming the 90 days horizon BASF SE NA is expected to under-perform the Ganfeng Lithium. But the otc stock apears to be less risky and, when comparing its historical volatility, BASF SE NA is 2.32 times less risky than Ganfeng Lithium. The otc stock trades about -0.07 of its potential returns per unit of risk. The Ganfeng Lithium Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 244.00 in Ganfeng Lithium Co on September 24, 2024 and sell it today you would earn a total of 21.00 from holding Ganfeng Lithium Co or generate 8.61% 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. Ganfeng Lithium Co
Performance |
Timeline |
BASF SE NA |
Ganfeng Lithium |
BASF SE and Ganfeng Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BASF SE and Ganfeng Lithium
The main advantage of trading using opposite BASF SE and Ganfeng Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, Ganfeng Lithium 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 Ganfeng Lithium will offset losses from the drop in Ganfeng Lithium's long position.The idea behind BASF SE NA and Ganfeng Lithium Co 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.Ganfeng Lithium vs. BASF SE NA | Ganfeng Lithium vs. Braskem SA Class | Ganfeng Lithium vs. Lsb Industries | Ganfeng Lithium vs. Dow Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
CEOs Directory Screen CEOs from public companies around the world |