Correlation Between Air Liquide and CN MODERN
Can any of the company-specific risk be diversified away by investing in both Air Liquide and CN MODERN 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 CN MODERN 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 CN MODERN DAIRY, you can compare the effects of market volatilities on Air Liquide and CN MODERN 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 CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and CN MODERN.
Diversification Opportunities for Air Liquide and CN MODERN
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and 07M is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY 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 CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of Air Liquide i.e., Air Liquide and CN MODERN go up and down completely randomly.
Pair Corralation between Air Liquide and CN MODERN
Assuming the 90 days horizon Air Liquide SA is expected to generate 0.43 times more return on investment than CN MODERN. However, Air Liquide SA is 2.34 times less risky than CN MODERN. It trades about 0.05 of its potential returns per unit of risk. CN MODERN DAIRY is currently generating about 0.01 per unit of risk. If you would invest 12,030 in Air Liquide SA on August 29, 2024 and sell it today you would earn a total of 3,598 from holding Air Liquide SA or generate 29.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Liquide SA vs. CN MODERN DAIRY
Performance |
| Timeline |
| Air Liquide SA |
| CN MODERN DAIRY |
Air Liquide and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Liquide and CN MODERN
The main advantage of trading using opposite Air Liquide and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.| Air Liquide vs. Superior Plus Corp | Air Liquide vs. NMI Holdings | Air Liquide vs. Origin Agritech | Air Liquide vs. SIVERS SEMICONDUCTORS 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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