Correlation Between AdvanSix and Innospec

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

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

Diversification Opportunities for AdvanSix and Innospec

0.51

Correlation Coefficient

AdvanSix  Innospec

Very weak diversification

The 3 months correlation between AdvanSix and Innospec is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding AdvanSix and Innospec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innospec and AdvanSix 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 AdvanSix are associated (or correlated) with Innospec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innospec has no effect on the direction of AdvanSix i.e., AdvanSix and Innospec go up and down completely randomly.

Pair Corralation between AdvanSix and Innospec

Given the investment horizon of 90 days AdvanSix is expected to generate 1.59 times more return on investment than Innospec. However, AdvanSix is 1.59 times more volatile than Innospec. It trades about -0.06 of its potential returns per unit of risk. Innospec is currently generating about -0.11 per unit of risk. If you would invest  2,174  in AdvanSix on July 25, 2025 and sell it today you would lose (221.00) from holding AdvanSix or give up 10.17% of portfolio value over 90 days.

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

AdvanSix  vs.  Innospec

AdvanSix

Risk-Adjusted Performance

Weakest

Over the last 90 days AdvanSix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Innospec

Risk-Adjusted Performance

Weakest

Over the last 90 days Innospec has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with AdvanSix and Innospec

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

The idea behind AdvanSix and Innospec 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.