Correlation Between Kronos Worldwide and Ashland Global

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

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

Diversification Opportunities for Kronos Worldwide and Ashland Global

0.14

Correlation Coefficient

Kronos Worldwide  Ashland Global

Average diversification

The 3 months correlation between Kronos and Ashland is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Worldwide and Ashland Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashland Global Holdings and Kronos Worldwide 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 Kronos Worldwide are associated (or correlated) with Ashland Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashland Global Holdings has no effect on the direction of Kronos Worldwide i.e., Kronos Worldwide and Ashland Global go up and down completely randomly.

Pair Corralation between Kronos Worldwide and Ashland Global

Considering the 90-day investment horizon Kronos Worldwide is expected to generate 1.18 times more return on investment than Ashland Global. However, Kronos Worldwide is 1.18 times more volatile than Ashland Global Holdings. It trades about 0.02 of its potential returns per unit of risk. Ashland Global Holdings is currently generating about -0.19 per unit of risk. If you would invest  1,138  in Kronos Worldwide on August 30, 2024 and sell it today you would earn a total of  8.00  from holding Kronos Worldwide or generate 0.7% return on investment over 90 days.

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

Kronos Worldwide  vs.  Ashland Global Holdings

Kronos Worldwide

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ashland Global Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ashland Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Kronos Worldwide and Ashland Global

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

The idea behind Kronos Worldwide and Ashland Global Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.