Correlation Between Huntsman and AdvanSix

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

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

Diversification Opportunities for Huntsman and AdvanSix

-0.05

Correlation Coefficient

Huntsman  AdvanSix

Good diversification

The 3 months correlation between Huntsman and AdvanSix is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix and Huntsman 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 Huntsman 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 Huntsman i.e., Huntsman and AdvanSix go up and down completely randomly.

Pair Corralation between Huntsman and AdvanSix

Considering the 90-day investment horizon Huntsman is expected to under-perform the AdvanSix. But the stock apears to be less risky and, when comparing its historical volatility, Huntsman is 1.09 times less risky than AdvanSix. The stock trades about -0.06 of its potential returns per unit of risk. The AdvanSix is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,771  in AdvanSix on September 2, 2024 and sell it today you would earn a total of  476.00  from holding AdvanSix or generate 17.18% return on investment over 90 days.

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

Huntsman  vs.  AdvanSix

Huntsman

Risk-Adjusted Performance

0 of 100

Very Weak

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

AdvanSix

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AdvanSix are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, AdvanSix showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huntsman and AdvanSix

The main advantage of trading using opposite Huntsman and AdvanSix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntsman 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 Huntsman 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..