Correlation Between IMCD NV and Arkema SA

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

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

Diversification Opportunities for IMCD NV and Arkema SA

0.33

Correlation Coefficient

IMCD NV  Arkema SA

Weak diversification

The 3 months correlation between IMCD and Arkema is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding IMCD NV and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and IMCD NV 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 IMCD NV are associated (or correlated) with Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA has no effect on the direction of IMCD NV i.e., IMCD NV and Arkema SA go up and down completely randomly.

Pair Corralation between IMCD NV and Arkema SA

Assuming the 90 days trading horizon IMCD NV is expected to under-perform the Arkema SA. But the stock apears to be less risky and, when comparing its historical volatility, IMCD NV is 1.44 times less risky than Arkema SA. The stock trades about -0.03 of its potential returns per unit of risk. The Arkema SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,236  in Arkema SA on April 25, 2025 and sell it today you would earn a total of  264.00  from holding Arkema SA or generate 4.23% return on investment over 90 days.

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

IMCD NV  vs.  Arkema SA

IMCD NV

Risk-Adjusted Performance

Insignificant

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

Arkema SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arkema SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Arkema SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IMCD NV and Arkema SA

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

The idea behind IMCD NV and Arkema SA 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.