Correlation Between Air Products and Orica
Can any of the company-specific risk be diversified away by investing in both Air Products and Orica 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 Orica 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 Orica Limited, you can compare the effects of market volatilities on Air Products and Orica 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 Orica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Orica.
Diversification Opportunities for Air Products and Orica
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Orica is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Orica Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orica Limited 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 Orica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orica Limited has no effect on the direction of Air Products i.e., Air Products and Orica go up and down completely randomly.
Pair Corralation between Air Products and Orica
Considering the 90-day investment horizon Air Products and is expected to generate 1.66 times more return on investment than Orica. However, Air Products is 1.66 times more volatile than Orica Limited. It trades about 0.12 of its potential returns per unit of risk. Orica Limited is currently generating about -0.11 per unit of risk. If you would invest 26,330 in Air Products and on August 29, 2024 and sell it today you would earn a total of 6,992 from holding Air Products and or generate 26.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Orica Limited
Performance |
| Timeline |
| Air Products |
| Orica Limited |
Air Products and Orica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Orica
The main advantage of trading using opposite Air Products and Orica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Orica 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 Orica will offset losses from the drop in Orica's long position.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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