Correlation Between COVESTRO and SGL CARBON

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

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

Diversification Opportunities for COVESTRO and SGL CARBON

0.0
  Correlation Coefficient
COVESTRO AG O
SGL CARBON SE

Pay attention - limited upside

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

Pair Corralation between COVESTRO and SGL CARBON

If you would invest (100.00)  in SGL CARBON SE on May 3, 2021 and sell it today you would earn a total of  100.00  from holding SGL CARBON SE 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.  SGL CARBON SE O N

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

COVESTRO and SGL CARBON Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with COVESTRO and SGL CARBON

The main advantage of trading using opposite COVESTRO and SGL CARBON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COVESTRO position performs unexpectedly, SGL CARBON 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 SGL CARBON will offset losses from the drop in SGL CARBON's long position.
The idea behind COVESTRO AG O and SGL CARBON SE 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.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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