Correlation Between AIR LIQUIDE and SHELF DRILLING
Can any of the company-specific risk be diversified away by investing in both AIR LIQUIDE and SHELF DRILLING 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 SHELF DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR LIQUIDE ADR and SHELF DRILLING LTD, you can compare the effects of market volatilities on AIR LIQUIDE and SHELF DRILLING 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 SHELF DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR LIQUIDE and SHELF DRILLING.
Diversification Opportunities for AIR LIQUIDE and SHELF DRILLING
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AIR and SHELF is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AIR LIQUIDE ADR and SHELF DRILLING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHELF DRILLING LTD 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 ADR are associated (or correlated) with SHELF DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHELF DRILLING LTD has no effect on the direction of AIR LIQUIDE i.e., AIR LIQUIDE and SHELF DRILLING go up and down completely randomly.
Pair Corralation between AIR LIQUIDE and SHELF DRILLING
Assuming the 90 days trading horizon AIR LIQUIDE ADR is expected to generate 0.28 times more return on investment than SHELF DRILLING. However, AIR LIQUIDE ADR is 3.63 times less risky than SHELF DRILLING. It trades about -0.06 of its potential returns per unit of risk. SHELF DRILLING LTD is currently generating about -0.13 per unit of risk. If you would invest 3,280 in AIR LIQUIDE ADR on August 29, 2024 and sell it today you would lose (180.00) from holding AIR LIQUIDE ADR or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR LIQUIDE ADR vs. SHELF DRILLING LTD
Performance |
| Timeline |
| AIR LIQUIDE ADR |
| SHELF DRILLING LTD |
AIR LIQUIDE and SHELF DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR LIQUIDE and SHELF DRILLING
The main advantage of trading using opposite AIR LIQUIDE and SHELF DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR LIQUIDE position performs unexpectedly, SHELF DRILLING 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 SHELF DRILLING will offset losses from the drop in SHELF DRILLING's long position.| AIR LIQUIDE vs. Superior Plus Corp | AIR LIQUIDE vs. NMI Holdings | AIR LIQUIDE vs. Origin Agritech | AIR LIQUIDE vs. SIVERS SEMICONDUCTORS AB |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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