Correlation Between Air Products and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Air Products and Axfood AB 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 Axfood AB 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 Axfood AB, you can compare the effects of market volatilities on Air Products and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Axfood AB.
Diversification Opportunities for Air Products and Axfood AB
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Axfood is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Air Products i.e., Air Products and Axfood AB go up and down completely randomly.
Pair Corralation between Air Products and Axfood AB
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 1.03 times more return on investment than Axfood AB. However, Air Products is 1.03 times more volatile than Axfood AB. It trades about 0.27 of its potential returns per unit of risk. Axfood AB is currently generating about -0.01 per unit of risk. If you would invest 31,089 in Air Products Chemicals on September 1, 2024 and sell it today you would earn a total of 2,140 from holding Air Products Chemicals or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products Chemicals vs. Axfood AB
Performance |
| Timeline |
| Air Products Chemicals |
| Axfood AB |
Air Products and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Axfood AB
The main advantage of trading using opposite Air Products and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB'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 |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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