Correlation Between Air Liquide and Carbios SAS
Can any of the company-specific risk be diversified away by investing in both Air Liquide and Carbios SAS 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 Carbios SAS 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 Carbios SAS, you can compare the effects of market volatilities on Air Liquide and Carbios SAS 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 Carbios SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and Carbios SAS.
Diversification Opportunities for Air Liquide and Carbios SAS
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Carbios is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and Carbios SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios SAS 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 Carbios SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios SAS has no effect on the direction of Air Liquide i.e., Air Liquide and Carbios SAS go up and down completely randomly.
Pair Corralation between Air Liquide and Carbios SAS
Assuming the 90 days horizon Air Liquide SA is expected to under-perform the Carbios SAS. But the pink sheet apears to be less risky and, when comparing its historical volatility, Air Liquide SA is 10.43 times less risky than Carbios SAS. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Carbios SAS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 837.00 in Carbios SAS on September 15, 2024 and sell it today you would earn a total of 94.00 from holding Carbios SAS or generate 11.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Liquide SA vs. Carbios SAS
Performance |
| Timeline |
| Air Liquide SA |
| Carbios SAS |
Air Liquide and Carbios SAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Liquide and Carbios SAS
The main advantage of trading using opposite Air Liquide and Carbios SAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide position performs unexpectedly, Carbios SAS 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 Carbios SAS will offset losses from the drop in Carbios SAS'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 |
| Carbios SAS vs. Chemours Co | Carbios SAS vs. International Flavors Fragrances | Carbios SAS vs. Air Products and | Carbios SAS vs. PPG Industries |
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 Stocks Directory module to find actively traded stocks across global markets.
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