Correlation Between Air Products and Element Solutions
Can any of the company-specific risk be diversified away by investing in both Air Products and Element Solutions 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 Element Solutions 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 Element Solutions, you can compare the effects of market volatilities on Air Products and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Element Solutions.
Diversification Opportunities for Air Products and Element Solutions
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Element is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of Air Products i.e., Air Products and Element Solutions go up and down completely randomly.
Pair Corralation between Air Products and Element Solutions
Considering the 90-day investment horizon Air Products is expected to generate 2.95 times less return on investment than Element Solutions. But when comparing it to its historical volatility, Air Products and is 1.06 times less risky than Element Solutions. It trades about 0.02 of its potential returns per unit of risk. Element Solutions is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,879 in Element Solutions on August 24, 2024 and sell it today you would earn a total of 1,025 from holding Element Solutions or generate 54.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Element Solutions
Performance |
| Timeline |
| Air Products |
| Element Solutions |
Air Products and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Element Solutions
The main advantage of trading using opposite Air Products and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| Air Products vs. Eshallgo Class A | Air Products vs. Amtech Systems | Air Products vs. Gold Fields Ltd | Air Products vs. Aegean Airlines SA |
| Element Solutions vs. Eshallgo Class A | Element Solutions vs. Amtech Systems | Element Solutions vs. Gold Fields Ltd | Element Solutions vs. Aegean Airlines SA |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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