Correlation Between Air Products and Ion Beam
Can any of the company-specific risk be diversified away by investing in both Air Products and Ion Beam 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 Air Products and Ion Beam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products Chemicals and Ion Beam Applications, you can compare the effects of market volatilities on Air Products and Ion Beam 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 Air Products with a short position of Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Ion Beam.
Diversification Opportunities for Air Products and Ion Beam
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Ion is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications and Air Products 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 Air Products Chemicals are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of Air Products i.e., Air Products and Ion Beam go up and down completely randomly.
Pair Corralation between Air Products and Ion Beam
Assuming the 90 days trading horizon Air Products Chemicals is expected to under-perform the Ion Beam. But the stock apears to be less risky and, when comparing its historical volatility, Air Products Chemicals is 1.92 times less risky than Ion Beam. The stock trades about -0.01 of its potential returns per unit of risk. The Ion Beam Applications is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,275 in Ion Beam Applications on September 14, 2024 and sell it today you would earn a total of 64.00 from holding Ion Beam Applications or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products Chemicals vs. Ion Beam Applications
Performance |
| Timeline |
| Air Products Chemicals |
| Ion Beam Applications |
Air Products and Ion Beam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Ion Beam
The main advantage of trading using opposite Air Products and Ion Beam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Ion Beam 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 Ion Beam will offset losses from the drop in Ion Beam's long position.| Air Products vs. Made Tech Group | Air Products vs. Datalogic | Air Products vs. Allianz Technology Trust | Air Products vs. Extra Space Storage |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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