Correlation Between Air Liquide and SEB SA
Can any of the company-specific risk be diversified away by investing in both Air Liquide and SEB SA 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 SEB SA 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 SEB SA, you can compare the effects of market volatilities on Air Liquide and SEB SA 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 SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and SEB SA.
Diversification Opportunities for Air Liquide and SEB SA
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and SEB is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA 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 SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Air Liquide i.e., Air Liquide and SEB SA go up and down completely randomly.
Pair Corralation between Air Liquide and SEB SA
Assuming the 90 days horizon Air Liquide SA is expected to generate 0.65 times more return on investment than SEB SA. However, Air Liquide SA is 1.54 times less risky than SEB SA. It trades about 0.01 of its potential returns per unit of risk. SEB SA is currently generating about -0.03 per unit of risk. If you would invest 15,537 in Air Liquide SA on September 2, 2024 and sell it today you would earn a total of 191.00 from holding Air Liquide SA or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Liquide SA vs. SEB SA
Performance |
| Timeline |
| Air Liquide SA |
| SEB SA |
Air Liquide and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Liquide and SEB SA
The main advantage of trading using opposite Air Liquide and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.| Air Liquide vs. Sanofi SA | Air Liquide vs. LOreal SA | Air Liquide vs. Vinci SA | Air Liquide vs. Schneider Electric SE |
| SEB SA vs. LVMH Mot Hennessy | SEB SA vs. Danone SA | SEB SA vs. Air Liquide SA | SEB SA vs. Hermes International SCA |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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