Correlation Between LAir Liquide and Kronos Worldwide
Can any of the company-specific risk be diversified away by investing in both LAir Liquide and Kronos Worldwide 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 Kronos Worldwide 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 Kronos Worldwide, you can compare the effects of market volatilities on LAir Liquide and Kronos Worldwide 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 Kronos Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and Kronos Worldwide.
Diversification Opportunities for LAir Liquide and Kronos Worldwide
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LAir and Kronos is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide 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 Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of LAir Liquide i.e., LAir Liquide and Kronos Worldwide go up and down completely randomly.
Pair Corralation between LAir Liquide and Kronos Worldwide
Assuming the 90 days horizon LAir Liquide is expected to generate 40.68 times less return on investment than Kronos Worldwide. But when comparing it to its historical volatility, LAir Liquide SA is 1.84 times less risky than Kronos Worldwide. It trades about 0.0 of its potential returns per unit of risk. Kronos Worldwide is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 923.00 in Kronos Worldwide on September 12, 2024 and sell it today you would earn a total of 118.00 from holding Kronos Worldwide or generate 12.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
LAir Liquide SA vs. Kronos Worldwide
Performance |
| Timeline |
| LAir Liquide SA |
| Kronos Worldwide |
LAir Liquide and Kronos Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAir Liquide and Kronos Worldwide
The main advantage of trading using opposite LAir Liquide and Kronos Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide position performs unexpectedly, Kronos Worldwide 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 Kronos Worldwide will offset losses from the drop in Kronos Worldwide's long position.| LAir Liquide vs. Chemours Co | LAir Liquide vs. International Flavors Fragrances | LAir Liquide vs. Air Products and | LAir Liquide vs. PPG Industries |
| Kronos Worldwide vs. Griffon | Kronos Worldwide vs. Merck Company | Kronos Worldwide vs. Brinker International | Kronos Worldwide vs. Alcoa 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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