Correlation Between LAir Liquide and MOLSON RS

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Can any of the company-specific risk be diversified away by investing in both LAir Liquide and MOLSON RS 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 MOLSON RS 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 MOLSON RS BEVERAGE, you can compare the effects of market volatilities on LAir Liquide and MOLSON RS 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 MOLSON RS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and MOLSON RS.

Diversification Opportunities for LAir Liquide and MOLSON RS

LAirMOLSONDiversified AwayLAirMOLSONDiversified Away100%
-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between LAir and MOLSON is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and MOLSON RS BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOLSON RS BEVERAGE 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 MOLSON RS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOLSON RS BEVERAGE has no effect on the direction of LAir Liquide i.e., LAir Liquide and MOLSON RS go up and down completely randomly.

Pair Corralation between LAir Liquide and MOLSON RS

Assuming the 90 days trading horizon LAir Liquide is expected to generate 3.82 times less return on investment than MOLSON RS. But when comparing it to its historical volatility, LAir Liquide SA is 2.41 times less risky than MOLSON RS. It trades about 0.01 of its potential returns per unit of risk. MOLSON RS BEVERAGE is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,606  in MOLSON RS BEVERAGE on November 21, 2024 and sell it today you would earn a total of  144.00  from holding MOLSON RS BEVERAGE or generate 2.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

LAir Liquide SA  vs.  MOLSON RS BEVERAGE

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505
JavaScript chart by amCharts 3.21.15AIL NY70
       Timeline  
LAir Liquide SA 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in LAir Liquide SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, LAir Liquide may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb155160165170175
MOLSON RS BEVERAGE 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in MOLSON RS BEVERAGE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, MOLSON RS may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb505152535455565758

LAir Liquide and MOLSON RS Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.77-2.09-1.41-0.73-0.04620.691.432.172.913.65 0.10.20.30.4
JavaScript chart by amCharts 3.21.15AIL NY70
       Returns  

Pair Trading with LAir Liquide and MOLSON RS

The main advantage of trading using opposite LAir Liquide and MOLSON RS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide position performs unexpectedly, MOLSON RS 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 MOLSON RS will offset losses from the drop in MOLSON RS's long position.
The idea behind LAir Liquide SA and MOLSON RS BEVERAGE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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