Correlation Between Air Products and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Air Products and KVH Industries 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 KVH Industries 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 KVH Industries, you can compare the effects of market volatilities on Air Products and KVH Industries 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 KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and KVH Industries.
Diversification Opportunities for Air Products and KVH Industries
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and KVH is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Air Products i.e., Air Products and KVH Industries go up and down completely randomly.
Pair Corralation between Air Products and KVH Industries
Considering the 90-day investment horizon Air Products and is expected to generate 0.69 times more return on investment than KVH Industries. However, Air Products and is 1.44 times less risky than KVH Industries. It trades about 0.14 of its potential returns per unit of risk. KVH Industries is currently generating about 0.04 per unit of risk. If you would invest 24,444 in Air Products and on September 3, 2024 and sell it today you would earn a total of 8,989 from holding Air Products and or generate 36.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. KVH Industries
Performance |
| Timeline |
| Air Products |
| KVH Industries |
Air Products and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and KVH Industries
The main advantage of trading using opposite Air Products and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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