Correlation Between Air Products and Eco Animal
Can any of the company-specific risk be diversified away by investing in both Air Products and Eco Animal 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 Eco Animal 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 Eco Animal Health, you can compare the effects of market volatilities on Air Products and Eco Animal 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 Eco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Eco Animal.
Diversification Opportunities for Air Products and Eco Animal
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Eco is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Eco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Animal Health 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 Eco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Animal Health has no effect on the direction of Air Products i.e., Air Products and Eco Animal go up and down completely randomly.
Pair Corralation between Air Products and Eco Animal
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 0.43 times more return on investment than Eco Animal. However, Air Products Chemicals is 2.31 times less risky than Eco Animal. It trades about 0.19 of its potential returns per unit of risk. Eco Animal Health is currently generating about 0.01 per unit of risk. If you would invest 31,616 in Air Products Chemicals on August 27, 2024 and sell it today you would earn a total of 1,455 from holding Air Products Chemicals or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products Chemicals vs. Eco Animal Health
Performance |
| Timeline |
| Air Products Chemicals |
| Eco Animal Health |
Air Products and Eco Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Eco Animal
The main advantage of trading using opposite Air Products and Eco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Eco Animal 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 Eco Animal will offset losses from the drop in Eco Animal's long position.| Air Products vs. Samsung Electronics Co | Air Products vs. Samsung Electronics Co | Air Products vs. Hyundai Motor | Air Products vs. Toyota Motor Corp |
| Eco Animal vs. Samsung Electronics Co | Eco Animal vs. Samsung Electronics Co | Eco Animal vs. Hyundai Motor | Eco Animal vs. Toyota Motor Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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