Correlation Between Air Liquide and Moulinvest
Can any of the company-specific risk be diversified away by investing in both Air Liquide and Moulinvest 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 Liquide and Moulinvest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Liquide SA and Moulinvest, you can compare the effects of market volatilities on Air Liquide and Moulinvest 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 Liquide with a short position of Moulinvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and Moulinvest.
Diversification Opportunities for Air Liquide and Moulinvest
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Moulinvest is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and Moulinvest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moulinvest and Air Liquide 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 Liquide SA are associated (or correlated) with Moulinvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moulinvest has no effect on the direction of Air Liquide i.e., Air Liquide and Moulinvest go up and down completely randomly.
Pair Corralation between Air Liquide and Moulinvest
Assuming the 90 days horizon Air Liquide SA is expected to generate 0.48 times more return on investment than Moulinvest. However, Air Liquide SA is 2.07 times less risky than Moulinvest. It trades about -0.04 of its potential returns per unit of risk. Moulinvest is currently generating about -0.15 per unit of risk. If you would invest 16,609 in Air Liquide SA on August 30, 2024 and sell it today you would lose (981.00) from holding Air Liquide SA or give up 5.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Liquide SA vs. Moulinvest
Performance |
| Timeline |
| Air Liquide SA |
| Moulinvest |
Air Liquide and Moulinvest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Liquide and Moulinvest
The main advantage of trading using opposite Air Liquide and Moulinvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide position performs unexpectedly, Moulinvest 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 Moulinvest will offset losses from the drop in Moulinvest's long position.| Air Liquide vs. Sanofi SA | Air Liquide vs. LOreal SA | Air Liquide vs. Vinci SA | Air Liquide vs. Schneider Electric SE |
| Moulinvest vs. SA Catana Group | Moulinvest vs. Poujoulat SA | Moulinvest vs. Piscines Desjoyaux SA | Moulinvest vs. Cogra 48 Socit |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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