Correlation Between WACKER CHEMIE and BASF SE

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

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

Diversification Opportunities for WACKER CHEMIE and BASF SE

0.0
  Correlation Coefficient
WACKER CHEMIE O
BASF SE NA

Pay attention - limited upside

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

Pair Corralation between WACKER CHEMIE and BASF SE

If you would invest  0.00  in BASF SE NA on April 30, 2021 and sell it today you would earn a total of  0.00  from holding BASF SE NA or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

WACKER CHEMIE O N  vs.  BASF SE NA O N

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

WACKER CHEMIE and BASF SE Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with WACKER CHEMIE and BASF SE

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

WACKER CHEMIE O

Pair trading matchups for WACKER CHEMIE

Ford vs. WACKER CHEMIE
Cisco Systems vs. WACKER CHEMIE
Pinterest vs. WACKER CHEMIE
Transformational vs. WACKER CHEMIE
Cassava Sciences vs. WACKER CHEMIE
Total Stock vs. WACKER CHEMIE
Vmware vs. WACKER CHEMIE
Nio Inc vs. WACKER CHEMIE
Total Intl vs. WACKER CHEMIE
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 WACKER CHEMIE 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. WACKER CHEMIE'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, WACKER CHEMIE'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 WACKER CHEMIE O.
The idea behind WACKER CHEMIE O and BASF SE NA 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.

BASF SE NA

Pair trading matchups for BASF SE

Otp Bank vs. BASF SE
Ark Fintech vs. BASF SE
Ford vs. BASF SE
Vmware vs. BASF SE
Pinterest vs. BASF SE
Nio Inc vs. BASF SE
Total Stock vs. BASF SE
Transformational vs. BASF SE
Cisco Systems vs. BASF SE
Microsoft Corp vs. BASF SE
Visa vs. BASF SE
Cassava Sciences vs. BASF SE
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 BASF SE 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. BASF SE'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, BASF SE'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 BASF SE NA.
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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