Correlation Between Axfood AB and Air Products
Can any of the company-specific risk be diversified away by investing in both Axfood AB 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 Axfood AB and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Air Products Chemicals, you can compare the effects of market volatilities on Axfood AB 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 Axfood AB with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Air Products.
Diversification Opportunities for Axfood AB and Air Products
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Axfood and Air is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB 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 Axfood AB 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 Axfood AB 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 Axfood AB i.e., Axfood AB and Air Products go up and down completely randomly.
Pair Corralation between Axfood AB and Air Products
Assuming the 90 days trading horizon Axfood AB is expected to under-perform the Air Products. But the stock apears to be less risky and, when comparing its historical volatility, Axfood AB is 6.27 times less risky than Air Products. The stock trades about -0.06 of its potential returns per unit of risk. The Air Products Chemicals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 26,620 in Air Products Chemicals on November 28, 2024 and sell it today you would earn a total of 5,065 from holding Air Products Chemicals or generate 19.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.87% |
| Values | Daily Returns |
Axfood AB vs. Air Products Chemicals
Performance |
| Timeline |
| Axfood AB |
| Air Products Chemicals |
Axfood AB and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Air Products
The main advantage of trading using opposite Axfood AB and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB 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.| Axfood AB vs. Wheaton Precious Metals | Axfood AB vs. Critical Metals Plc | Axfood AB vs. Liechtensteinische Landesbank AG | Axfood AB vs. Tetragon Financial Group |
| Air Products vs. Flutter Entertainment PLC | Air Products vs. LBG Media PLC | Air Products vs. Electronic Arts | Air Products vs. G5 Entertainment AB |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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