Correlation Between Huntsman and Ganfeng Lithium

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

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

Diversification Opportunities for Huntsman and Ganfeng Lithium

-0.57

Correlation Coefficient

Huntsman  Ganfeng Lithium

Excellent diversification

The 3 months correlation between Huntsman and Ganfeng is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium 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 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 Huntsman i.e., Huntsman and Ganfeng Lithium go up and down completely randomly.

Pair Corralation between Huntsman and Ganfeng Lithium

Considering the 90-day investment horizon Huntsman is expected to generate 0.29 times more return on investment than Ganfeng Lithium. However, Huntsman is 3.44 times less risky than Ganfeng Lithium. It trades about -0.15 of its potential returns per unit of risk. Ganfeng Lithium Co is currently generating about -0.1 per unit of risk. If you would invest  1,910  in Huntsman on September 20, 2024 and sell it today you would lose (80.00) from holding Huntsman or give up 4.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Huntsman  vs.  Ganfeng Lithium Co

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 inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ganfeng Lithium

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ganfeng Lithium Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Ganfeng Lithium showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huntsman and Ganfeng Lithium

The main advantage of trading using opposite Huntsman and Ganfeng Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntsman 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 Huntsman 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.