Correlation Between American Clean and BASF SE

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

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

Diversification Opportunities for American Clean and BASF SE

0.33

Correlation Coefficient

American Clean  BASF SE

Weak diversification

The 3 months correlation between American and BASF is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Clean Resources and BASF SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE ADR and American Clean 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 American Clean Resources 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 ADR has no effect on the direction of American Clean i.e., American Clean and BASF SE go up and down completely randomly.

Pair Corralation between American Clean and BASF SE

Given the investment horizon of 90 days American Clean Resources is expected to generate 12.98 times more return on investment than BASF SE. However, American Clean is 12.98 times more volatile than BASF SE ADR. It trades about 0.13 of its potential returns per unit of risk. BASF SE ADR is currently generating about 0.02 per unit of risk. If you would invest  200.00  in American Clean Resources on September 16, 2025 and sell it today you would earn a total of  305.00  from holding American Clean Resources or generate 152.5% return on investment over 90 days.

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

American Clean Resources  vs.  BASF SE ADR

American Clean Resources

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in American Clean Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, American Clean reported solid returns over the last few months and may actually be approaching a breakup point.

BASF SE ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BASF SE ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, BASF SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Clean and BASF SE

The main advantage of trading using opposite American Clean and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Clean 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.

The idea behind American Clean Resources and BASF SE ADR 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.