Correlation Between Ren Redes and Air Products
Can any of the company-specific risk be diversified away by investing in both Ren Redes and Air Products 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 Ren Redes and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ren Redes Energeticas and Air Products Chemicals, you can compare the effects of market volatilities on Ren Redes and Air Products 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 Ren Redes with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ren Redes and Air Products.
Diversification Opportunities for Ren Redes and Air Products
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ren and Air is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ren Redes Energeticas and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Ren Redes 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 Ren Redes Energeticas are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Ren Redes i.e., Ren Redes and Air Products go up and down completely randomly.
Pair Corralation between Ren Redes and Air Products
Assuming the 90 days trading horizon Ren Redes is expected to generate 15.05 times less return on investment than Air Products. But when comparing it to its historical volatility, Ren Redes Energeticas is 7.34 times less risky than Air Products. It trades about 0.02 of its potential returns per unit of risk. Air Products Chemicals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 27,168 in Air Products Chemicals on August 31, 2024 and sell it today you would earn a total of 6,156 from holding Air Products Chemicals or generate 22.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Ren Redes Energeticas vs. Air Products Chemicals
Performance |
| Timeline |
| Ren Redes Energeticas |
| Air Products Chemicals |
Ren Redes and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ren Redes and Air Products
The main advantage of trading using opposite Ren Redes and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ren Redes position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Ren Redes vs. Allianz Technology Trust | Ren Redes vs. Extra Space Storage | Ren Redes vs. Celebrus Technologies plc | Ren Redes vs. Deltex Medical Group |
| Air Products vs. Neometals | Air Products vs. Coor Service Management | Air Products vs. Aeorema Communications Plc | Air Products vs. JLEN Environmental Assets |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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