Correlation Between AIR PRODCHEMICALS and Tokyo Electron
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and Tokyo Electron 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 Tokyo Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Tokyo Electron Limited, you can compare the effects of market volatilities on AIR PRODCHEMICALS and Tokyo Electron 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 Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Tokyo Electron.
Diversification Opportunities for AIR PRODCHEMICALS and Tokyo Electron
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AIR and Tokyo is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Tokyo Electron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron 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 Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Tokyo Electron go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Tokyo Electron
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.46 times more return on investment than Tokyo Electron. However, AIR PRODCHEMICALS is 2.17 times less risky than Tokyo Electron. It trades about 0.15 of its potential returns per unit of risk. Tokyo Electron Limited is currently generating about -0.06 per unit of risk. If you would invest 21,687 in AIR PRODCHEMICALS on September 3, 2024 and sell it today you would earn a total of 9,943 from holding AIR PRODCHEMICALS or generate 45.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Tokyo Electron Limited
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Tokyo Electron |
AIR PRODCHEMICALS and Tokyo Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Tokyo Electron
The main advantage of trading using opposite AIR PRODCHEMICALS and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, Tokyo Electron 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 Tokyo Electron will offset losses from the drop in Tokyo Electron's long position.| AIR PRODCHEMICALS vs. Tsingtao Brewery | AIR PRODCHEMICALS vs. Broadwind | AIR PRODCHEMICALS vs. National Beverage Corp | AIR PRODCHEMICALS vs. United Breweries Co |
| Tokyo Electron vs. Ares Management Corp | Tokyo Electron vs. Flutter Entertainment PLC | Tokyo Electron vs. National Health Investors | Tokyo Electron vs. ATRESMEDIA |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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