Correlation Between Apple and LAir Liquide
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and LAir Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and LAir Liquide SA, you can compare the effects of market volatilities on Apple 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 Apple with a short position of LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and LAir Liquide.
Diversification Opportunities for Apple and LAir Liquide
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and LAir is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and LAir Liquide go up and down completely randomly.
Pair Corralation between Apple and LAir Liquide
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.35 times more return on investment than LAir Liquide. However, Apple is 1.35 times more volatile than LAir Liquide SA. It trades about 0.08 of its potential returns per unit of risk. LAir Liquide SA is currently generating about 0.05 per unit of risk. If you would invest 13,401 in Apple Inc on August 29, 2024 and sell it today you would earn a total of 8,939 from holding Apple Inc or generate 66.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. LAir Liquide SA
Performance |
| Timeline |
| Apple Inc |
| LAir Liquide SA |
Apple and LAir Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and LAir Liquide
The main advantage of trading using opposite Apple and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Elmos Semiconductor SE | Apple vs. JAPAN TOBACCO UNSPADR12 | Apple vs. Samsung Electronics Co | Apple vs. BE Semiconductor Industries |
| LAir Liquide vs. Cleanaway Waste Management | LAir Liquide vs. Verizon Communications | LAir Liquide vs. SBA Communications Corp | LAir Liquide vs. Infrastrutture Wireless Italiane |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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