Correlation Between AIR LIQUIDE and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both AIR LIQUIDE and Yokohama Rubber 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 Yokohama Rubber 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 The Yokohama Rubber, you can compare the effects of market volatilities on AIR LIQUIDE and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR LIQUIDE and Yokohama Rubber.
Diversification Opportunities for AIR LIQUIDE and Yokohama Rubber
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AIR and Yokohama is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding AIR LIQUIDE ADR and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of AIR LIQUIDE i.e., AIR LIQUIDE and Yokohama Rubber go up and down completely randomly.
Pair Corralation between AIR LIQUIDE and Yokohama Rubber
Assuming the 90 days trading horizon AIR LIQUIDE ADR is expected to under-perform the Yokohama Rubber. But the stock apears to be less risky and, when comparing its historical volatility, AIR LIQUIDE ADR is 1.5 times less risky than Yokohama Rubber. The stock trades about -0.03 of its potential returns per unit of risk. The The Yokohama Rubber is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,850 in The Yokohama Rubber on September 22, 2024 and sell it today you would earn a total of 150.00 from holding The Yokohama Rubber or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR LIQUIDE ADR vs. The Yokohama Rubber
Performance |
| Timeline |
| AIR LIQUIDE ADR |
| Yokohama Rubber |
AIR LIQUIDE and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR LIQUIDE and Yokohama Rubber
The main advantage of trading using opposite AIR LIQUIDE and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR LIQUIDE position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| AIR LIQUIDE vs. Cleanaway Waste Management | AIR LIQUIDE vs. GREENX METALS LTD | AIR LIQUIDE vs. AGF Management Limited | AIR LIQUIDE vs. Brockhaus Capital Management |
| Yokohama Rubber vs. Warner Music Group | Yokohama Rubber vs. JAPAN TOBACCO UNSPADR12 | Yokohama Rubber vs. Chesapeake Utilities | Yokohama Rubber vs. AIR LIQUIDE ADR |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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