Correlation Between Croda International and GS Chain

Can any of the company-specific risk be diversified away by investing in both Croda International and GS Chain 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 GS Chain 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 GS Chain PLC, you can compare the effects of market volatilities on Croda International and GS Chain 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 GS Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Croda International and GS Chain.

Diversification Opportunities for Croda International and GS Chain

-0.72

Correlation Coefficient

Croda International  GS Chain

Pay attention - limited upside

The 3 months correlation between Croda and GSC is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Croda International Plc and GS Chain PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GS Chain 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 GS Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GS Chain PLC has no effect on the direction of Croda International i.e., Croda International and GS Chain go up and down completely randomly.

Pair Corralation between Croda International and GS Chain

Assuming the 90 days trading horizon Croda International Plc is expected to generate 0.99 times more return on investment than GS Chain. However, Croda International Plc is 1.01 times less risky than GS Chain. It trades about 0.13 of its potential returns per unit of risk. GS Chain PLC is currently generating about 0.11 per unit of risk. If you would invest  83.00  in Croda International Plc on April 24, 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Croda International Plc  vs.  GS Chain 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 uncertain basic indicators, Croda International unveiled solid returns over the last few months and may actually be approaching a breakup point.

GS Chain PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GS Chain PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GS Chain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Croda International and GS Chain

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

The idea behind Croda International Plc and GS Chain 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.