Correlation Between Air Liquide and Sika AG
Can any of the company-specific risk be diversified away by investing in both Air Liquide and Sika AG 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 Sika AG 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 Sika AG ADR, you can compare the effects of market volatilities on Air Liquide and Sika AG 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 Sika AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and Sika AG.
Diversification Opportunities for Air Liquide and Sika AG
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and Sika is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and Sika AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG ADR 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 Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG ADR has no effect on the direction of Air Liquide i.e., Air Liquide and Sika AG go up and down completely randomly.
Pair Corralation between Air Liquide and Sika AG
Assuming the 90 days horizon Air Liquide SA is expected to generate 0.87 times more return on investment than Sika AG. However, Air Liquide SA is 1.15 times less risky than Sika AG. It trades about -0.3 of its potential returns per unit of risk. Sika AG ADR is currently generating about -0.26 per unit of risk. If you would invest 3,623 in Air Liquide SA on August 24, 2024 and sell it today you would lose (287.00) from holding Air Liquide SA or give up 7.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Liquide SA vs. Sika AG ADR
Performance |
| Timeline |
| Air Liquide SA |
| Sika AG ADR |
Air Liquide and Sika AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Liquide and Sika AG
The main advantage of trading using opposite Air Liquide and Sika AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide position performs unexpectedly, Sika AG 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 Sika AG will offset losses from the drop in Sika AG'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 |
| Sika AG vs. Sherwin Williams Co | Sika AG vs. Air Liquide SA | Sika AG vs. Air Products and | Sika AG vs. Ecolab Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |