Correlation Between Air Products and Capital Metals
Can any of the company-specific risk be diversified away by investing in both Air Products and Capital Metals 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 Capital Metals 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 Capital Metals PLC, you can compare the effects of market volatilities on Air Products and Capital Metals 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 Capital Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Capital Metals.
Diversification Opportunities for Air Products and Capital Metals
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Capital is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Capital Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Metals PLC 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 Capital Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Metals PLC has no effect on the direction of Air Products i.e., Air Products and Capital Metals go up and down completely randomly.
Pair Corralation between Air Products and Capital Metals
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 0.7 times more return on investment than Capital Metals. However, Air Products Chemicals is 1.42 times less risky than Capital Metals. It trades about -0.35 of its potential returns per unit of risk. Capital Metals PLC is currently generating about -0.32 per unit of risk. If you would invest 31,574 in Air Products Chemicals on October 10, 2024 and sell it today you would lose (2,646) from holding Air Products Chemicals or give up 8.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Air Products Chemicals vs. Capital Metals PLC
Performance |
| Timeline |
| Air Products Chemicals |
| Capital Metals PLC |
Air Products and Capital Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Capital Metals
The main advantage of trading using opposite Air Products and Capital Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Capital Metals 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 Capital Metals will offset losses from the drop in Capital Metals' long position.| Air Products vs. Iron Mountain | Air Products vs. Cizzle Biotechnology Holdings | Air Products vs. Odfjell Drilling | Air Products vs. Veolia Environnement VE |
| Capital Metals vs. Givaudan SA | Capital Metals vs. Antofagasta PLC | Capital Metals vs. Ferrexpo PLC | Capital Metals vs. Atalaya Mining |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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