Correlation Between COVESTRO and LANXESS AG

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

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

Diversification Opportunities for COVESTRO and LANXESS AG

0.0
  Correlation Coefficient
COVESTRO AG O
LANXESS AG

Pay attention - limited upside

The 3 months correlation between COVESTRO and LANXESS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding COVESTRO AG O N and LANXESS AG in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on LANXESS AG and COVESTRO 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 COVESTRO AG O are associated (or correlated) with LANXESS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANXESS AG has no effect on the direction of COVESTRO i.e., COVESTRO and LANXESS AG go up and down completely randomly.

Pair Corralation between COVESTRO and LANXESS AG

If you would invest (100.00)  in LANXESS AG on May 3, 2021 and sell it today you would earn a total of  100.00  from holding LANXESS AG or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

COVESTRO AG O N  vs.  LANXESS AG

 Performance (%) 
      Timeline 
COVESTRO AG O 
 COVESTRO Performance
0 of 100
Over the last 90 days COVESTRO AG O has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, COVESTRO is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
LANXESS AG 
 LANXESS Performance
0 of 100
Over the last 90 days LANXESS AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, LANXESS AG is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

COVESTRO and LANXESS AG Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with COVESTRO and LANXESS AG

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

LANXESS AG

Pair trading matchups for LANXESS AG

Check out your portfolio center. 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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