Correlation Between LANXESS AG and SGL CARBON

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

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

Diversification Opportunities for LANXESS AG and SGL CARBON

0.0
  Correlation Coefficient
LANXESS AG
SGL CARBON SE

Pay attention - limited upside

The 1 month correlation between LANXESS and SGL CARBON is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LANXESS AG 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 LANXESS AG 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 LANXESS AG 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 LANXESS AG i.e., LANXESS AG and SGL CARBON go up and down completely randomly.

Pair Corralation between LANXESS AG and SGL CARBON

If you would invest  0.00  in SGL CARBON SE on May 1, 2021 and sell it today you would earn a total of  0.00  from holding SGL CARBON SE or generate 0.0% return on investment over 90 days.
Time Period1 Month [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

LANXESS AG  vs.  SGL CARBON SE O N

 Performance (%) 
      Timeline 
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 current 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

LANXESS AG and SGL CARBON Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with LANXESS AG and SGL CARBON

The main advantage of trading using opposite LANXESS AG and SGL CARBON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LANXESS AG 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.

LANXESS AG

Pair trading matchups for LANXESS AG

Equinix vs. LANXESS AG
Advance Auto vs. LANXESS AG
Facebook vs. LANXESS AG
Salesforce vs. LANXESS AG
Corvus Gold vs. LANXESS AG
China Molybdenum vs. LANXESS AG
Eagle MLP vs. LANXESS AG
Esports Entertainment vs. LANXESS AG
Xinjiang Goldwind vs. LANXESS AG
Kerry Logistics vs. LANXESS AG
Gilead Sciences vs. LANXESS AG
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against LANXESS AG as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. LANXESS AG's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, LANXESS AG's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to LANXESS AG.
The idea behind LANXESS AG 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.

SGL CARBON SE

Pair trading matchups for SGL CARBON

Xinjiang Goldwind vs. SGL CARBON
Microsoft Corp vs. SGL CARBON
Ford vs. SGL CARBON
Salesforce vs. SGL CARBON
Amazon vs. SGL CARBON
Twitter vs. SGL CARBON
Aspen Technology vs. SGL CARBON
Equinix vs. SGL CARBON
Advance Auto vs. SGL CARBON
Facebook vs. SGL CARBON
Gilead Sciences vs. SGL CARBON
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against SGL CARBON as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. SGL CARBON's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, SGL CARBON's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to SGL CARBON SE.
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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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