Correlation Between Air Products and The9
Can any of the company-specific risk be diversified away by investing in both Air Products and The9 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 The9 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 The9 Ltd ADR, you can compare the effects of market volatilities on Air Products and The9 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 The9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and The9.
Diversification Opportunities for Air Products and The9
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and The9 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and The9 Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The9 Ltd ADR 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 The9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The9 Ltd ADR has no effect on the direction of Air Products i.e., Air Products and The9 go up and down completely randomly.
Pair Corralation between Air Products and The9
Considering the 90-day investment horizon Air Products is expected to generate 2.82 times less return on investment than The9. But when comparing it to its historical volatility, Air Products and is 3.83 times less risky than The9. It trades about 0.04 of its potential returns per unit of risk. The9 Ltd ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,305 in The9 Ltd ADR on August 27, 2024 and sell it today you would lose (199.00) from holding The9 Ltd ADR or give up 15.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. The9 Ltd ADR
Performance |
| Timeline |
| Air Products |
| The9 Ltd ADR |
Air Products and The9 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and The9
The main advantage of trading using opposite Air Products and The9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, The9 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 The9 will offset losses from the drop in The9'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 |
| The9 vs. Atari SA | The9 vs. Victory Square Technologies | The9 vs. Motorsport Gaming Us | The9 vs. Alpha Esports Tech |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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