Correlation Between LAir Liquide and IBU-tec Advanced
Can any of the company-specific risk be diversified away by investing in both LAir Liquide and IBU-tec Advanced 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 LAir Liquide and IBU-tec Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAir Liquide SA and IBU tec advanced materials, you can compare the effects of market volatilities on LAir Liquide and IBU-tec Advanced 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 LAir Liquide with a short position of IBU-tec Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and IBU-tec Advanced.
Diversification Opportunities for LAir Liquide and IBU-tec Advanced
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LAir and IBU-tec is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and IBU tec advanced materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBU tec advanced and LAir 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 LAir Liquide SA are associated (or correlated) with IBU-tec Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBU tec advanced has no effect on the direction of LAir Liquide i.e., LAir Liquide and IBU-tec Advanced go up and down completely randomly.
Pair Corralation between LAir Liquide and IBU-tec Advanced
Assuming the 90 days trading horizon LAir Liquide SA is expected to generate 0.23 times more return on investment than IBU-tec Advanced. However, LAir Liquide SA is 4.27 times less risky than IBU-tec Advanced. It trades about 0.06 of its potential returns per unit of risk. IBU tec advanced materials is currently generating about -0.05 per unit of risk. If you would invest 14,466 in LAir Liquide SA on December 13, 2024 and sell it today you would earn a total of 3,894 from holding LAir Liquide SA or generate 26.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAir Liquide SA vs. IBU tec advanced materials
Performance |
| Timeline |
| LAir Liquide SA |
| IBU tec advanced |
LAir Liquide and IBU-tec Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAir Liquide and IBU-tec Advanced
The main advantage of trading using opposite LAir Liquide and IBU-tec Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide position performs unexpectedly, IBU-tec Advanced 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 IBU-tec Advanced will offset losses from the drop in IBU-tec Advanced's long position.| LAir Liquide vs. MONEYSUPERMARKET | ||
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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