Correlation Between LAir Liquide and Orica
Can any of the company-specific risk be diversified away by investing in both LAir Liquide and Orica 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 Orica 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 Orica Limited, you can compare the effects of market volatilities on LAir Liquide and Orica 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 Orica. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and Orica.
Diversification Opportunities for LAir Liquide and Orica
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LAir and Orica is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and Orica Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orica Limited 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 Orica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orica Limited has no effect on the direction of LAir Liquide i.e., LAir Liquide and Orica go up and down completely randomly.
Pair Corralation between LAir Liquide and Orica
Assuming the 90 days horizon LAir Liquide is expected to generate 1.55 times less return on investment than Orica. But when comparing it to its historical volatility, LAir Liquide SA is 1.46 times less risky than Orica. It trades about 0.04 of its potential returns per unit of risk. Orica Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 855.00 in Orica Limited on September 4, 2024 and sell it today you would earn a total of 205.00 from holding Orica Limited or generate 23.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 59.72% |
| Values | Daily Returns |
LAir Liquide SA vs. Orica Limited
Performance |
| Timeline |
| LAir Liquide SA |
| Orica Limited |
LAir Liquide and Orica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAir Liquide and Orica
The main advantage of trading using opposite LAir Liquide and Orica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide position performs unexpectedly, Orica 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 Orica will offset losses from the drop in Orica's long position.| LAir Liquide vs. Sherwin Williams Co | LAir Liquide vs. Air Liquide SA | LAir Liquide vs. Air Products and | LAir Liquide vs. Ecolab Inc |
| Orica vs. Sherwin Williams Co | Orica vs. Air Liquide SA | Orica vs. LAir Liquide SA | Orica vs. Air Products and |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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