Correlation Between Corporate Travel and Air Liquide

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Can any of the company-specific risk be diversified away by investing in both Corporate Travel and Air Liquide 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 Corporate Travel and Air Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Travel Management and Air Liquide SA, you can compare the effects of market volatilities on Corporate Travel and Air Liquide 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 Corporate Travel with a short position of Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and Air Liquide.

Diversification Opportunities for Corporate Travel and Air Liquide

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Corporate and Air is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Corporate Travel i.e., Corporate Travel and Air Liquide go up and down completely randomly.

Pair Corralation between Corporate Travel and Air Liquide

Assuming the 90 days trading horizon Corporate Travel is expected to generate 8.26 times less return on investment than Air Liquide. In addition to that, Corporate Travel is 2.33 times more volatile than Air Liquide SA. It trades about 0.0 of its total potential returns per unit of risk. Air Liquide SA is currently generating about 0.04 per unit of volatility. If you would invest  13,965  in Air Liquide SA on August 25, 2024 and sell it today you would earn a total of  1,791  from holding Air Liquide SA or generate 12.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Corporate Travel Management  vs.  Air Liquide SA

 Performance 
       Timeline  
Corporate Travel Man 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Corporate Travel unveiled solid returns over the last few months and may actually be approaching a breakup point.
Air Liquide SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Air Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Air Liquide is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Corporate Travel and Air Liquide Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Corporate Travel and Air Liquide

The main advantage of trading using opposite Corporate Travel and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel position performs unexpectedly, Air Liquide 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 Liquide will offset losses from the drop in Air Liquide's long position.
The idea behind Corporate Travel Management and Air Liquide SA 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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