Correlation Between Air Products and LAir Liquide
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and LAir Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and LAir Liquide SA, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and LAir Liquide.
Diversification Opportunities for Air Products and LAir Liquide
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and LAir is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and 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 Air Products 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 Products and 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 Air Products i.e., Air Products and LAir Liquide go up and down completely randomly.
Pair Corralation between Air Products and LAir Liquide
Considering the 90-day investment horizon Air Products and is expected to generate 1.02 times more return on investment than LAir Liquide. However, Air Products is 1.02 times more volatile than LAir Liquide SA. It trades about 0.12 of its potential returns per unit of risk. LAir Liquide SA is currently generating about -0.01 per unit of risk. If you would invest 26,125 in Air Products and on August 24, 2024 and sell it today you would earn a total of 6,760 from holding Air Products and or generate 25.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. LAir Liquide SA
Performance |
| Timeline |
| Air Products |
| LAir Liquide SA |
Air Products and LAir Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and LAir Liquide
The main advantage of trading using opposite Air Products and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
| LAir Liquide vs. Sherwin Williams Co | LAir Liquide vs. Air Liquide SA | LAir Liquide vs. Air Products and | LAir Liquide 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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