Correlation Between AIR LIQUIDE and Air New
Can any of the company-specific risk be diversified away by investing in both AIR LIQUIDE and Air New 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 Air New 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 Air New Zealand, you can compare the effects of market volatilities on AIR LIQUIDE and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR LIQUIDE and Air New.
Diversification Opportunities for AIR LIQUIDE and Air New
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between AIR and Air is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding AIR LIQUIDE ADR and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of AIR LIQUIDE i.e., AIR LIQUIDE and Air New go up and down completely randomly.
Pair Corralation between AIR LIQUIDE and Air New
Assuming the 90 days trading horizon AIR LIQUIDE ADR is expected to under-perform the Air New. But the stock apears to be less risky and, when comparing its historical volatility, AIR LIQUIDE ADR is 2.11 times less risky than Air New. The stock trades about -0.24 of its potential returns per unit of risk. The Air New Zealand is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Air New Zealand on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Air New Zealand or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR LIQUIDE ADR vs. Air New Zealand
Performance |
| Timeline |
| AIR LIQUIDE ADR |
| Air New Zealand |
AIR LIQUIDE and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR LIQUIDE and Air New
The main advantage of trading using opposite AIR LIQUIDE and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR LIQUIDE position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New'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 |
| Air New vs. THRACE PLASTICS | Air New vs. Plastic Omnium | Air New vs. X FAB Silicon Foundries | Air New vs. MACOM Technology Solutions |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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