Correlation Between Ashland Global and Celanese

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

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

Diversification Opportunities for Ashland Global and Celanese

0.64

Correlation Coefficient

Ashland Global  Celanese

Poor diversification

The 3 months correlation between Ashland and Celanese is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and Celanese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celanese and Ashland Global 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 Ashland Global Holdings are associated (or correlated) with Celanese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celanese has no effect on the direction of Ashland Global i.e., Ashland Global and Celanese go up and down completely randomly.

Pair Corralation between Ashland Global and Celanese

Considering the 90-day investment horizon Ashland Global Holdings is expected to generate 0.74 times more return on investment than Celanese. However, Ashland Global Holdings is 1.36 times less risky than Celanese. It trades about -0.02 of its potential returns per unit of risk. Celanese is currently generating about -0.22 per unit of risk. If you would invest  9,659  in Ashland Global Holdings on February 2, 2024 and sell it today you would lose (80.00) from holding Ashland Global Holdings or give up 0.83% of portfolio value over 90 days.

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

Ashland Global Holdings  vs.  Celanese

Ashland Global Holdings

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ashland Global Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Ashland Global is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Celanese

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Ashland Global and Celanese

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

The idea behind Ashland Global Holdings and Celanese 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 CEOs Directory module to screen CEOs from public companies around the world.