Correlation Between Air Products and Cembra Money
Can any of the company-specific risk be diversified away by investing in both Air Products and Cembra Money 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 Cembra Money 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 Cembra Money Bank, you can compare the effects of market volatilities on Air Products and Cembra Money 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 Cembra Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Cembra Money.
Diversification Opportunities for Air Products and Cembra Money
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Air and Cembra is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Cembra Money Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cembra Money Bank 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 Cembra Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cembra Money Bank has no effect on the direction of Air Products i.e., Air Products and Cembra Money go up and down completely randomly.
Pair Corralation between Air Products and Cembra Money
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 4.17 times more return on investment than Cembra Money. However, Air Products is 4.17 times more volatile than Cembra Money Bank. It trades about 0.02 of its potential returns per unit of risk. Cembra Money Bank is currently generating about 0.03 per unit of risk. If you would invest 28,975 in Air Products Chemicals on September 26, 2024 and sell it today you would earn a total of 627.00 from holding Air Products Chemicals or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Air Products Chemicals vs. Cembra Money Bank
Performance |
| Timeline |
| Air Products Chemicals |
| Cembra Money Bank |
Air Products and Cembra Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Cembra Money
The main advantage of trading using opposite Air Products and Cembra Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Cembra Money 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 Cembra Money will offset losses from the drop in Cembra Money's long position.| Air Products vs. Uniper SE | Air Products vs. Mulberry Group PLC | Air Products vs. London Security Plc | Air Products vs. Triad Group PLC |
| Cembra Money vs. Park Hotels Resorts | Cembra Money vs. Lindsell Train Investment | Cembra Money vs. PPHE Hotel Group | Cembra Money vs. Air Products Chemicals |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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