Correlation Between Celanese and AdvanSix

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

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

Diversification Opportunities for Celanese and AdvanSix

-0.32

Correlation Coefficient

Celanese  AdvanSix

Very good diversification

The 3 months correlation between Celanese and AdvanSix is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix and Celanese 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 Celanese 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 Celanese i.e., Celanese and AdvanSix go up and down completely randomly.

Pair Corralation between Celanese and AdvanSix

Allowing for the 90-day total investment horizon Celanese is expected to under-perform the AdvanSix. In addition to that, Celanese is 1.95 times more volatile than AdvanSix. It trades about -0.2 of its total potential returns per unit of risk. AdvanSix is currently generating about 0.07 per unit of volatility. If you would invest  2,941  in AdvanSix on August 30, 2024 and sell it today you would earn a total of  221.00  from holding AdvanSix or generate 7.51% return on investment over 90 days.

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

Celanese  vs.  AdvanSix

Celanese

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celanese has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

AdvanSix

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AdvanSix are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, AdvanSix may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Celanese and AdvanSix

The main advantage of trading using opposite Celanese and AdvanSix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celanese 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 Celanese 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.