Correlation Between Air Liquide and Asahi Kaisei
Can any of the company-specific risk be diversified away by investing in both Air Liquide and Asahi Kaisei 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 Air Liquide and Asahi Kaisei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Liquide SA and Asahi Kaisei Corp, you can compare the effects of market volatilities on Air Liquide and Asahi Kaisei 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 Air Liquide with a short position of Asahi Kaisei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and Asahi Kaisei.
Diversification Opportunities for Air Liquide and Asahi Kaisei
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Air and Asahi is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and Asahi Kaisei Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Kaisei Corp and Air 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 Air Liquide SA are associated (or correlated) with Asahi Kaisei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Kaisei Corp has no effect on the direction of Air Liquide i.e., Air Liquide and Asahi Kaisei go up and down completely randomly.
Pair Corralation between Air Liquide and Asahi Kaisei
Assuming the 90 days horizon Air Liquide is expected to generate 20.58 times less return on investment than Asahi Kaisei. But when comparing it to its historical volatility, Air Liquide SA is 1.16 times less risky than Asahi Kaisei. It trades about 0.0 of its potential returns per unit of risk. Asahi Kaisei Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,356 in Asahi Kaisei Corp on August 28, 2024 and sell it today you would earn a total of 64.00 from holding Asahi Kaisei Corp or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Liquide SA vs. Asahi Kaisei Corp
Performance |
| Timeline |
| Air Liquide SA |
| Asahi Kaisei Corp |
Air Liquide and Asahi Kaisei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Liquide and Asahi Kaisei
The main advantage of trading using opposite Air Liquide and Asahi Kaisei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide position performs unexpectedly, Asahi Kaisei 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 Asahi Kaisei will offset losses from the drop in Asahi Kaisei's long position.| Air Liquide vs. Asia Carbon Industries | Air Liquide vs. Akzo Nobel NV | Air Liquide vs. Avoca LLC | Air Liquide vs. AGC Inc ADR |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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