Correlation Between Air Products and Amaroq Minerals
Can any of the company-specific risk be diversified away by investing in both Air Products and Amaroq Minerals 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 Amaroq Minerals 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 Amaroq Minerals, you can compare the effects of market volatilities on Air Products and Amaroq Minerals 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 Amaroq Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Amaroq Minerals.
Diversification Opportunities for Air Products and Amaroq Minerals
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Amaroq is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Amaroq Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amaroq Minerals 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 Amaroq Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amaroq Minerals has no effect on the direction of Air Products i.e., Air Products and Amaroq Minerals go up and down completely randomly.
Pair Corralation between Air Products and Amaroq Minerals
Assuming the 90 days trading horizon Air Products is expected to generate 3.65 times less return on investment than Amaroq Minerals. But when comparing it to its historical volatility, Air Products Chemicals is 3.92 times less risky than Amaroq Minerals. It trades about 0.27 of its potential returns per unit of risk. Amaroq Minerals is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 8,050 in Amaroq Minerals on September 1, 2024 and sell it today you would earn a total of 2,165 from holding Amaroq Minerals or generate 26.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Air Products Chemicals vs. Amaroq Minerals
Performance |
| Timeline |
| Air Products Chemicals |
| Amaroq Minerals |
Air Products and Amaroq Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Amaroq Minerals
The main advantage of trading using opposite Air Products and Amaroq Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Amaroq Minerals 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 Amaroq Minerals will offset losses from the drop in Amaroq Minerals' 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 |
| Amaroq Minerals vs. Futura Medical | Amaroq Minerals vs. Universal Music Group | Amaroq Minerals vs. Take Two Interactive Software | Amaroq Minerals vs. Medical Properties Trust |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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