Correlation Between LAir Liquide and H B
Can any of the company-specific risk be diversified away by investing in both LAir Liquide and H B 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 H B 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 H B Fuller, you can compare the effects of market volatilities on LAir Liquide and H B 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 H B. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and H B.
Diversification Opportunities for LAir Liquide and H B
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LAir and FUL is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller 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 H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of LAir Liquide i.e., LAir Liquide and H B go up and down completely randomly.
Pair Corralation between LAir Liquide and H B
Assuming the 90 days horizon LAir Liquide SA is expected to generate 1.16 times more return on investment than H B. However, LAir Liquide is 1.16 times more volatile than H B Fuller. It trades about 0.17 of its potential returns per unit of risk. H B Fuller is currently generating about -0.42 per unit of risk. If you would invest 17,392 in LAir Liquide SA on November 27, 2024 and sell it today you would earn a total of 890.00 from holding LAir Liquide SA or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAir Liquide SA vs. H B Fuller
Performance |
| Timeline |
| LAir Liquide SA |
| H B Fuller |
LAir Liquide and H B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAir Liquide and H B
The main advantage of trading using opposite LAir Liquide and H B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide position performs unexpectedly, H B 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 H B will offset losses from the drop in H B's long position.| LAir Liquide vs. Asia Carbon Industries | LAir Liquide vs. Akzo Nobel NV | LAir Liquide vs. Avoca LLC | LAir Liquide vs. AGC Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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