Correlation Between Air Products and LifeSafe Holdings
Can any of the company-specific risk be diversified away by investing in both Air Products and LifeSafe Holdings 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 LifeSafe Holdings 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 LifeSafe Holdings PLC, you can compare the effects of market volatilities on Air Products and LifeSafe Holdings 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 LifeSafe Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and LifeSafe Holdings.
Diversification Opportunities for Air Products and LifeSafe Holdings
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and LifeSafe is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and LifeSafe Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeSafe Holdings 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 LifeSafe Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeSafe Holdings PLC has no effect on the direction of Air Products i.e., Air Products and LifeSafe Holdings go up and down completely randomly.
Pair Corralation between Air Products and LifeSafe Holdings
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 5.92 times more return on investment than LifeSafe Holdings. However, Air Products is 5.92 times more volatile than LifeSafe Holdings PLC. It trades about 0.06 of its potential returns per unit of risk. LifeSafe Holdings PLC is currently generating about 0.0 per unit of risk. If you would invest 26,650 in Air Products Chemicals on September 3, 2024 and sell it today you would earn a total of 6,579 from holding Air Products Chemicals or generate 24.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Air Products Chemicals vs. LifeSafe Holdings PLC
Performance |
| Timeline |
| Air Products Chemicals |
| LifeSafe Holdings PLC |
Air Products and LifeSafe Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and LifeSafe Holdings
The main advantage of trading using opposite Air Products and LifeSafe Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, LifeSafe Holdings 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 LifeSafe Holdings will offset losses from the drop in LifeSafe Holdings' long position.| Air Products vs. Morgan Advanced Materials | Air Products vs. Applied Materials | Air Products vs. Compagnie Plastic Omnium | Air Products vs. Spirent Communications plc |
| LifeSafe Holdings vs. Wheaton Precious Metals | LifeSafe Holdings vs. AMG Advanced Metallurgical | LifeSafe Holdings vs. Adriatic Metals | LifeSafe Holdings vs. Air Products Chemicals |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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