Correlation Between Air Products and Lanxess AG
Can any of the company-specific risk be diversified away by investing in both Air Products and Lanxess AG 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 Lanxess AG 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 Lanxess AG, you can compare the effects of market volatilities on Air Products and Lanxess AG 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 Lanxess AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Lanxess AG.
Diversification Opportunities for Air Products and Lanxess AG
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Lanxess is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Lanxess AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanxess AG 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 Lanxess AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanxess AG has no effect on the direction of Air Products i.e., Air Products and Lanxess AG go up and down completely randomly.
Pair Corralation between Air Products and Lanxess AG
Considering the 90-day investment horizon Air Products and is expected to generate 0.62 times more return on investment than Lanxess AG. However, Air Products and is 1.61 times less risky than Lanxess AG. It trades about 0.04 of its potential returns per unit of risk. Lanxess AG is currently generating about -0.02 per unit of risk. If you would invest 26,918 in Air Products and on August 27, 2024 and sell it today you would earn a total of 6,265 from holding Air Products and or generate 23.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 71.58% |
| Values | Daily Returns |
Air Products and vs. Lanxess AG
Performance |
| Timeline |
| Air Products |
| Lanxess AG |
Air Products and Lanxess AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Lanxess AG
The main advantage of trading using opposite Air Products and Lanxess AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Lanxess AG 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 Lanxess AG will offset losses from the drop in Lanxess AG's long position.| Air Products vs. PPG Industries | Air Products vs. Ecolab Inc | Air Products vs. Sherwin Williams Co | Air Products vs. LyondellBasell Industries NV |
| Lanxess AG vs. First Graphene | Lanxess AG vs. HUMANA INC | Lanxess AG vs. Aquagold International | Lanxess AG vs. Barloworld Ltd ADR |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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