Correlation Between AIR PRODCHEMICALS and FIRST SHIP
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and FIRST SHIP 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 PRODCHEMICALS and FIRST SHIP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and FIRST SHIP LEASE, you can compare the effects of market volatilities on AIR PRODCHEMICALS and FIRST SHIP 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 PRODCHEMICALS with a short position of FIRST SHIP. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and FIRST SHIP.
Diversification Opportunities for AIR PRODCHEMICALS and FIRST SHIP
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between AIR and FIRST is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and FIRST SHIP LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SHIP LEASE and AIR PRODCHEMICALS 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 PRODCHEMICALS are associated (or correlated) with FIRST SHIP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SHIP LEASE has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and FIRST SHIP go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and FIRST SHIP
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.7 times more return on investment than FIRST SHIP. However, AIR PRODCHEMICALS is 1.43 times less risky than FIRST SHIP. It trades about 0.55 of its potential returns per unit of risk. FIRST SHIP LEASE is currently generating about -0.02 per unit of risk. If you would invest 27,730 in AIR PRODCHEMICALS on November 3, 2024 and sell it today you would earn a total of 4,660 from holding AIR PRODCHEMICALS or generate 16.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. FIRST SHIP LEASE
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| FIRST SHIP LEASE |
AIR PRODCHEMICALS and FIRST SHIP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and FIRST SHIP
The main advantage of trading using opposite AIR PRODCHEMICALS and FIRST SHIP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, FIRST SHIP 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 FIRST SHIP will offset losses from the drop in FIRST SHIP's long position.| AIR PRODCHEMICALS vs. BRAEMAR HOTELS RES | AIR PRODCHEMICALS vs. DALATA HOTEL | AIR PRODCHEMICALS vs. COVIVIO HOTELS INH | AIR PRODCHEMICALS vs. Pebblebrook Hotel Trust |
| FIRST SHIP vs. BROADSTNET LEADL 00025 | FIRST SHIP vs. ADRIATIC METALS LS 013355 | FIRST SHIP vs. MAGNUM MINING EXP | FIRST SHIP vs. Yuexiu Transport Infrastructure |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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