Correlation Between Croda International and AJ Bell

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

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

Diversification Opportunities for Croda International and AJ Bell

0.84

Correlation Coefficient

Croda International  AJ Bell

Very poor diversification

The 3 months correlation between Croda and AJB is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Croda International Plc and AJ Bell plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Bell plc and Croda International 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 Croda International Plc are associated (or correlated) with AJ Bell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Bell plc has no effect on the direction of Croda International i.e., Croda International and AJ Bell go up and down completely randomly.

Pair Corralation between Croda International and AJ Bell

Assuming the 90 days trading horizon Croda International Plc is expected to generate 79.75 times more return on investment than AJ Bell. However, Croda International is 79.75 times more volatile than AJ Bell plc. It trades about 0.13 of its potential returns per unit of risk. AJ Bell plc is currently generating about 0.22 per unit of risk. If you would invest  83.00  in Croda International Plc on April 25, 2025 and sell it today you would earn a total of  8,667  from holding Croda International Plc or generate 10442.17% return on investment over 90 days.

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

Croda International Plc  vs.  AJ Bell plc

Croda International Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Croda International Plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Croda International unveiled solid returns over the last few months and may actually be approaching a breakup point.

AJ Bell plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AJ Bell plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, AJ Bell exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Croda International and AJ Bell

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

The idea behind Croda International Plc and AJ Bell plc 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 the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.