Correlation Between Air Products and Ferrexpo PLC
Can any of the company-specific risk be diversified away by investing in both Air Products and Ferrexpo PLC 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 Ferrexpo PLC 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 Ferrexpo PLC, you can compare the effects of market volatilities on Air Products and Ferrexpo PLC 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 Ferrexpo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Ferrexpo PLC.
Diversification Opportunities for Air Products and Ferrexpo PLC
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Ferrexpo is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Ferrexpo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrexpo 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 Ferrexpo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrexpo PLC has no effect on the direction of Air Products i.e., Air Products and Ferrexpo PLC go up and down completely randomly.
Pair Corralation between Air Products and Ferrexpo PLC
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 0.28 times more return on investment than Ferrexpo PLC. However, Air Products Chemicals is 3.63 times less risky than Ferrexpo PLC. It trades about -0.37 of its potential returns per unit of risk. Ferrexpo PLC is currently generating about -0.17 per unit of risk. If you would invest 31,272 in Air Products Chemicals on October 11, 2024 and sell it today you would lose (2,708) from holding Air Products Chemicals or give up 8.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Air Products Chemicals vs. Ferrexpo PLC
Performance |
| Timeline |
| Air Products Chemicals |
| Ferrexpo PLC |
Air Products and Ferrexpo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Ferrexpo PLC
The main advantage of trading using opposite Air Products and Ferrexpo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Ferrexpo PLC 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 Ferrexpo PLC will offset losses from the drop in Ferrexpo PLC's long position.| Air Products vs. Iron Mountain | Air Products vs. Cizzle Biotechnology Holdings | Air Products vs. Odfjell Drilling | Air Products vs. Veolia Environnement VE |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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