Correlation Between Air Liquide and Carrefour
Can any of the company-specific risk be diversified away by investing in both Air Liquide and Carrefour 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 Carrefour 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 Carrefour SA, you can compare the effects of market volatilities on Air Liquide and Carrefour 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 Carrefour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and Carrefour.
Diversification Opportunities for Air Liquide and Carrefour
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Carrefour is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour 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 Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA has no effect on the direction of Air Liquide i.e., Air Liquide and Carrefour go up and down completely randomly.
Pair Corralation between Air Liquide and Carrefour
Assuming the 90 days horizon Air Liquide SA is expected to under-perform the Carrefour. But the stock apears to be less risky and, when comparing its historical volatility, Air Liquide SA is 1.37 times less risky than Carrefour. The stock trades about -0.21 of its potential returns per unit of risk. The Carrefour SA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,486 in Carrefour SA on August 25, 2024 and sell it today you would lose (37.00) from holding Carrefour SA or give up 2.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Liquide SA vs. Carrefour SA
Performance |
| Timeline |
| Air Liquide SA |
| Carrefour SA |
Air Liquide and Carrefour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Liquide and Carrefour
The main advantage of trading using opposite Air Liquide and Carrefour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide position performs unexpectedly, Carrefour 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 Carrefour will offset losses from the drop in Carrefour's long position.| Air Liquide vs. Corporate Travel Management | Air Liquide vs. CeoTronics AG | Air Liquide vs. Cleanaway Waste Management | Air Liquide vs. Playa Hotels Resorts |
| Carrefour vs. United Rentals | Carrefour vs. COMPUTERSHARE | Carrefour vs. Alfa Financial Software | Carrefour vs. LG Display Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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