Correlation Between Air Liquide and AdvanSix
Can any of the company-specific risk be diversified away by investing in both Air Liquide and AdvanSix 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 AdvanSix 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 AdvanSix, you can compare the effects of market volatilities on Air Liquide and AdvanSix 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 AdvanSix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and AdvanSix.
Diversification Opportunities for Air Liquide and AdvanSix
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and AdvanSix is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix 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 AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of Air Liquide i.e., Air Liquide and AdvanSix go up and down completely randomly.
Pair Corralation between Air Liquide and AdvanSix
Assuming the 90 days horizon Air Liquide SA is expected to under-perform the AdvanSix. But the stock apears to be less risky and, when comparing its historical volatility, Air Liquide SA is 2.26 times less risky than AdvanSix. The stock trades about -0.08 of its potential returns per unit of risk. The AdvanSix is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,426 in AdvanSix on September 12, 2024 and sell it today you would earn a total of 534.00 from holding AdvanSix or generate 22.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Air Liquide SA vs. AdvanSix
Performance |
| Timeline |
| Air Liquide SA |
| AdvanSix |
Air Liquide and AdvanSix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Liquide and AdvanSix
The main advantage of trading using opposite Air Liquide and AdvanSix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide position performs unexpectedly, AdvanSix 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 AdvanSix will offset losses from the drop in AdvanSix's long position.| Air Liquide vs. AIR LIQUIDE ADR | Air Liquide vs. Shin Etsu Chemical Co | Air Liquide vs. Ganfeng Lithium Co | Air Liquide vs. Superior Plus Corp |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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