Correlation Between Air Products and Kronos Worldwide
Can any of the company-specific risk be diversified away by investing in both Air Products and Kronos Worldwide 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 Kronos Worldwide 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 Kronos Worldwide, you can compare the effects of market volatilities on Air Products and Kronos Worldwide 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 Kronos Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Kronos Worldwide.
Diversification Opportunities for Air Products and Kronos Worldwide
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Kronos is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide 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 Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of Air Products i.e., Air Products and Kronos Worldwide go up and down completely randomly.
Pair Corralation between Air Products and Kronos Worldwide
Considering the 90-day investment horizon Air Products and is expected to generate 0.41 times more return on investment than Kronos Worldwide. However, Air Products and is 2.41 times less risky than Kronos Worldwide. It trades about 0.03 of its potential returns per unit of risk. Kronos Worldwide is currently generating about -0.02 per unit of risk. If you would invest 32,662 in Air Products and on August 24, 2024 and sell it today you would earn a total of 226.00 from holding Air Products and or generate 0.69% 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. Kronos Worldwide
Performance |
| Timeline |
| Air Products |
| Kronos Worldwide |
Air Products and Kronos Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Kronos Worldwide
The main advantage of trading using opposite Air Products and Kronos Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Kronos Worldwide 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 Kronos Worldwide will offset losses from the drop in Kronos Worldwide's 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 |
| Kronos Worldwide vs. Eshallgo Class A | Kronos Worldwide vs. Amtech Systems | Kronos Worldwide vs. Gold Fields Ltd | Kronos Worldwide 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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