Correlation Between AIR LIQUIDE and Indorama Ventures
Can any of the company-specific risk be diversified away by investing in both AIR LIQUIDE and Indorama Ventures 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 Indorama Ventures 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 Indorama Ventures PCL, you can compare the effects of market volatilities on AIR LIQUIDE and Indorama Ventures 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 Indorama Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR LIQUIDE and Indorama Ventures.
Diversification Opportunities for AIR LIQUIDE and Indorama Ventures
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AIR and Indorama is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding AIR LIQUIDE ADR and Indorama Ventures PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Ventures PCL 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 Indorama Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Ventures PCL has no effect on the direction of AIR LIQUIDE i.e., AIR LIQUIDE and Indorama Ventures go up and down completely randomly.
Pair Corralation between AIR LIQUIDE and Indorama Ventures
Assuming the 90 days trading horizon AIR LIQUIDE is expected to generate 10.64 times less return on investment than Indorama Ventures. But when comparing it to its historical volatility, AIR LIQUIDE ADR is 3.97 times less risky than Indorama Ventures. It trades about 0.04 of its potential returns per unit of risk. Indorama Ventures PCL is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4.14 in Indorama Ventures PCL on September 3, 2024 and sell it today you would earn a total of 63.86 from holding Indorama Ventures PCL or generate 1542.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR LIQUIDE ADR vs. Indorama Ventures PCL
Performance |
| Timeline |
| AIR LIQUIDE ADR |
| Indorama Ventures PCL |
AIR LIQUIDE and Indorama Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR LIQUIDE and Indorama Ventures
The main advantage of trading using opposite AIR LIQUIDE and Indorama Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR LIQUIDE position performs unexpectedly, Indorama Ventures 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 Indorama Ventures will offset losses from the drop in Indorama Ventures' long position.| AIR LIQUIDE vs. AM EAGLE OUTFITTERS | AIR LIQUIDE vs. American Eagle Outfitters | AIR LIQUIDE vs. Ebro Foods SA | AIR LIQUIDE vs. G III Apparel Group |
| Indorama Ventures vs. AIR LIQUIDE ADR | Indorama Ventures vs. Shin Etsu Chemical Co | Indorama Ventures vs. BASF SE | Indorama Ventures vs. BASF SE |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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