Correlation Between LAir Liquide and PPG Industries
Can any of the company-specific risk be diversified away by investing in both LAir Liquide and PPG Industries 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 PPG Industries 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 PPG Industries, you can compare the effects of market volatilities on LAir Liquide and PPG Industries 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 PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and PPG Industries.
Diversification Opportunities for LAir Liquide and PPG Industries
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between LAir and PPG is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries 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 PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of LAir Liquide i.e., LAir Liquide and PPG Industries go up and down completely randomly.
Pair Corralation between LAir Liquide and PPG Industries
Assuming the 90 days horizon LAir Liquide SA is expected to generate 0.76 times more return on investment than PPG Industries. However, LAir Liquide SA is 1.31 times less risky than PPG Industries. It trades about 0.17 of its potential returns per unit of risk. PPG Industries is currently generating about -0.2 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAir Liquide SA vs. PPG Industries
Performance |
| Timeline |
| LAir Liquide SA |
| PPG Industries |
LAir Liquide and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAir Liquide and PPG Industries
The main advantage of trading using opposite LAir Liquide and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide position performs unexpectedly, PPG Industries 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 PPG Industries will offset losses from the drop in PPG Industries' 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 |
| PPG Industries vs. Air Products and | PPG Industries vs. Linde plc Ordinary | PPG Industries vs. Ecolab Inc | PPG Industries vs. LyondellBasell Industries NV |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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