Correlation Between LAir Liquide and Olin
Can any of the company-specific risk be diversified away by investing in both LAir Liquide and Olin 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 Olin 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 Olin Corporation, you can compare the effects of market volatilities on LAir Liquide and Olin 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 Olin. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and Olin.
Diversification Opportunities for LAir Liquide and Olin
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LAir and Olin is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and Olin Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olin 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 Olin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olin has no effect on the direction of LAir Liquide i.e., LAir Liquide and Olin go up and down completely randomly.
Pair Corralation between LAir Liquide and Olin
Assuming the 90 days horizon LAir Liquide SA is expected to generate 0.48 times more return on investment than Olin. However, LAir Liquide SA is 2.06 times less risky than Olin. It trades about -0.04 of its potential returns per unit of risk. Olin Corporation is currently generating about -0.22 per unit of risk. If you would invest 16,969 in LAir Liquide SA on September 13, 2024 and sell it today you would lose (205.00) from holding LAir Liquide SA or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAir Liquide SA vs. Olin Corp.
Performance |
| Timeline |
| LAir Liquide SA |
| Olin |
LAir Liquide and Olin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAir Liquide and Olin
The main advantage of trading using opposite LAir Liquide and Olin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide position performs unexpectedly, Olin 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 Olin will offset losses from the drop in Olin'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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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