Correlation Between AIR LIQUIDE and PT Barito
Can any of the company-specific risk be diversified away by investing in both AIR LIQUIDE and PT Barito 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 PT Barito 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 PT Barito Pacific, you can compare the effects of market volatilities on AIR LIQUIDE and PT Barito 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 PT Barito. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR LIQUIDE and PT Barito.
Diversification Opportunities for AIR LIQUIDE and PT Barito
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AIR and OB8 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding AIR LIQUIDE ADR and PT Barito Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Barito Pacific 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 PT Barito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Barito Pacific has no effect on the direction of AIR LIQUIDE i.e., AIR LIQUIDE and PT Barito go up and down completely randomly.
Pair Corralation between AIR LIQUIDE and PT Barito
Assuming the 90 days trading horizon AIR LIQUIDE is expected to generate 3.36 times less return on investment than PT Barito. But when comparing it to its historical volatility, AIR LIQUIDE ADR is 4.3 times less risky than PT Barito. It trades about 0.02 of its potential returns per unit of risk. PT Barito Pacific is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 7.84 in PT Barito Pacific on September 12, 2024 and sell it today you would lose (3.19) from holding PT Barito Pacific or give up 40.69% 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. PT Barito Pacific
Performance |
| Timeline |
| AIR LIQUIDE ADR |
| PT Barito Pacific |
AIR LIQUIDE and PT Barito Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR LIQUIDE and PT Barito
The main advantage of trading using opposite AIR LIQUIDE and PT Barito positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR LIQUIDE position performs unexpectedly, PT Barito 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 PT Barito will offset losses from the drop in PT Barito's long position.| AIR LIQUIDE vs. Shin Etsu Chemical Co | AIR LIQUIDE vs. Ganfeng Lithium Co | AIR LIQUIDE vs. Superior Plus Corp | AIR LIQUIDE vs. SIVERS SEMICONDUCTORS AB |
| PT Barito vs. AIR LIQUIDE ADR | PT Barito vs. Shin Etsu Chemical Co | PT Barito vs. Ganfeng Lithium Co | PT Barito vs. Superior Plus Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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