Correlation Between AdvanSix and Lsb Industries

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

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

Diversification Opportunities for AdvanSix and Lsb Industries

0.84

Correlation Coefficient

AdvanSix  Lsb Industries

Very poor diversification

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

Pair Corralation between AdvanSix and Lsb Industries

Given the investment horizon of 90 days AdvanSix is expected to generate 1.93 times less return on investment than Lsb Industries. But when comparing it to its historical volatility, AdvanSix is 1.15 times less risky than Lsb Industries. It trades about 0.06 of its potential returns per unit of risk. Lsb Industries is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  659.00  in Lsb Industries on February 26, 2025 and sell it today you would earn a total of  100.00  from holding Lsb Industries or generate 15.17% return on investment over 90 days.

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

AdvanSix  vs.  Lsb Industries

AdvanSix

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvanSix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lsb Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lsb Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lsb Industries is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AdvanSix and Lsb Industries

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

The idea behind AdvanSix and Lsb Industries 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..