Correlation Between Air Products and Lendinvest PLC

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Can any of the company-specific risk be diversified away by investing in both Air Products and Lendinvest 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 Lendinvest 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 Lendinvest PLC, you can compare the effects of market volatilities on Air Products and Lendinvest 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 Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Lendinvest PLC.

Diversification Opportunities for Air Products and Lendinvest PLC

-0.8
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Air and Lendinvest is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest 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 Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of Air Products i.e., Air Products and Lendinvest PLC go up and down completely randomly.

Pair Corralation between Air Products and Lendinvest PLC

Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 1.01 times more return on investment than Lendinvest PLC. However, Air Products is 1.01 times more volatile than Lendinvest PLC. It trades about 0.27 of its potential returns per unit of risk. Lendinvest PLC is currently generating about 0.08 per unit of risk. If you would invest  31,089  in Air Products Chemicals on September 1, 2024 and sell it today you would earn a total of  2,140  from holding Air Products Chemicals or generate 6.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Air Products Chemicals  vs.  Lendinvest PLC

 Performance 
       Timeline  
Air Products Chemicals 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Air Products Chemicals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Air Products unveiled solid returns over the last few months and may actually be approaching a breakup point.
Lendinvest PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lendinvest PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Air Products and Lendinvest PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Air Products and Lendinvest PLC

The main advantage of trading using opposite Air Products and Lendinvest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Lendinvest 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 Lendinvest PLC will offset losses from the drop in Lendinvest PLC's long position.
The idea behind Air Products Chemicals and Lendinvest PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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