Correlation Between LAir Liquide and Liontown Resources
Can any of the company-specific risk be diversified away by investing in both LAir Liquide and Liontown Resources 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 Liontown Resources 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 Liontown Resources Limited, you can compare the effects of market volatilities on LAir Liquide and Liontown Resources 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 Liontown Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and Liontown Resources.
Diversification Opportunities for LAir Liquide and Liontown Resources
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between LAir and Liontown is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and Liontown Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontown Resources 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 Liontown Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontown Resources has no effect on the direction of LAir Liquide i.e., LAir Liquide and Liontown Resources go up and down completely randomly.
Pair Corralation between LAir Liquide and Liontown Resources
Assuming the 90 days trading horizon LAir Liquide SA is expected to generate 0.1 times more return on investment than Liontown Resources. However, LAir Liquide SA is 9.81 times less risky than Liontown Resources. It trades about 0.2 of its potential returns per unit of risk. Liontown Resources Limited is currently generating about -0.03 per unit of risk. If you would invest 16,972 in LAir Liquide SA on December 8, 2024 and sell it today you would earn a total of 1,072 from holding LAir Liquide SA or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LAir Liquide SA vs. Liontown Resources Limited
Performance |
| Timeline |
| LAir Liquide SA |
| Liontown Resources |
LAir Liquide and Liontown Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAir Liquide and Liontown Resources
The main advantage of trading using opposite LAir Liquide and Liontown Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide position performs unexpectedly, Liontown Resources 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 Liontown Resources will offset losses from the drop in Liontown Resources' long position.| LAir Liquide vs. PARKEN Sport Entertainment | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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