Correlation Between Akzo Nobel and LAir Liquide
Can any of the company-specific risk be diversified away by investing in both Akzo Nobel and LAir Liquide 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 Akzo Nobel and LAir Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akzo Nobel NV and LAir Liquide SA, you can compare the effects of market volatilities on Akzo Nobel and LAir Liquide 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 Akzo Nobel with a short position of LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akzo Nobel and LAir Liquide.
Diversification Opportunities for Akzo Nobel and LAir Liquide
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Akzo and LAir is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Akzo Nobel NV and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA and Akzo Nobel 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 Akzo Nobel NV are associated (or correlated) with LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of Akzo Nobel i.e., Akzo Nobel and LAir Liquide go up and down completely randomly.
Pair Corralation between Akzo Nobel and LAir Liquide
Assuming the 90 days horizon Akzo Nobel NV is expected to under-perform the LAir Liquide. In addition to that, Akzo Nobel is 1.47 times more volatile than LAir Liquide SA. It trades about -0.27 of its total potential returns per unit of risk. LAir Liquide SA is currently generating about -0.37 per unit of volatility. If you would invest 18,353 in LAir Liquide SA on August 28, 2024 and sell it today you would lose (1,654) from holding LAir Liquide SA or give up 9.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akzo Nobel NV vs. LAir Liquide SA
Performance |
| Timeline |
| Akzo Nobel NV |
| LAir Liquide SA |
Akzo Nobel and LAir Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akzo Nobel and LAir Liquide
The main advantage of trading using opposite Akzo Nobel and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akzo Nobel position performs unexpectedly, LAir Liquide 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 LAir Liquide will offset losses from the drop in LAir Liquide's long position.| Akzo Nobel vs. Avoca LLC | Akzo Nobel vs. AGC Inc ADR | Akzo Nobel vs. Arkema SA ADR | Akzo Nobel vs. AirBoss of America |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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