Correlation Between Air Products and Young Cos
Can any of the company-specific risk be diversified away by investing in both Air Products and Young Cos 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 Young Cos 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 Young Cos Brewery, you can compare the effects of market volatilities on Air Products and Young Cos 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 Young Cos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Young Cos.
Diversification Opportunities for Air Products and Young Cos
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Young is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Young Cos Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Cos Brewery 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 Young Cos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Cos Brewery has no effect on the direction of Air Products i.e., Air Products and Young Cos go up and down completely randomly.
Pair Corralation between Air Products and Young Cos
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 0.77 times more return on investment than Young Cos. However, Air Products Chemicals is 1.3 times less risky than Young Cos. It trades about 0.12 of its potential returns per unit of risk. Young Cos Brewery is currently generating about 0.07 per unit of risk. If you would invest 32,127 in Air Products Chemicals on August 25, 2024 and sell it today you would earn a total of 944.00 from holding Air Products Chemicals or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products Chemicals vs. Young Cos Brewery
Performance |
| Timeline |
| Air Products Chemicals |
| Young Cos Brewery |
Air Products and Young Cos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Young Cos
The main advantage of trading using opposite Air Products and Young Cos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Young Cos 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 Young Cos will offset losses from the drop in Young Cos' long position.| Air Products vs. Quadrise Plc | Air Products vs. Intuitive Investments Group | Air Products vs. European Metals Holdings | Air Products vs. Athelney Trust plc |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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