Correlation Between LAir Liquide and Arkema SA
Can any of the company-specific risk be diversified away by investing in both LAir Liquide and Arkema SA 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 LAir Liquide and Arkema SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAir Liquide SA and Arkema SA, you can compare the effects of market volatilities on LAir Liquide and Arkema SA 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 LAir Liquide with a short position of Arkema SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and Arkema SA.
Diversification Opportunities for LAir Liquide and Arkema SA
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LAir and Arkema is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and LAir 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 LAir Liquide SA are associated (or correlated) with Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA has no effect on the direction of LAir Liquide i.e., LAir Liquide and Arkema SA go up and down completely randomly.
Pair Corralation between LAir Liquide and Arkema SA
If you would invest 17,151 in LAir Liquide SA on December 4, 2024 and sell it today you would earn a total of 1,459 from holding LAir Liquide SA or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAir Liquide SA vs. Arkema SA
Performance |
| Timeline |
| LAir Liquide SA |
| Arkema SA |
LAir Liquide and Arkema SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAir Liquide and Arkema SA
The main advantage of trading using opposite LAir Liquide and Arkema SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide position performs unexpectedly, Arkema SA 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 Arkema SA will offset losses from the drop in Arkema SA's long position.| LAir Liquide vs. Asia Carbon Industries | ||
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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