Correlation Between Air Products and Sika AG
Can any of the company-specific risk be diversified away by investing in both Air Products and Sika 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 Sika 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 Sika AG, you can compare the effects of market volatilities on Air Products and Sika 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 Sika AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Sika AG.
Diversification Opportunities for Air Products and Sika AG
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Sika is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Sika AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika 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 Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG has no effect on the direction of Air Products i.e., Air Products and Sika AG go up and down completely randomly.
Pair Corralation between Air Products and Sika AG
Considering the 90-day investment horizon Air Products and is expected to generate 0.43 times more return on investment than Sika AG. However, Air Products and is 2.33 times less risky than Sika AG. It trades about 0.03 of its potential returns per unit of risk. Sika AG is currently generating about -0.1 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 223.00 from holding Air Products and or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Sika AG
Performance |
| Timeline |
| Air Products |
| Sika AG |
Air Products and Sika AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Sika AG
The main advantage of trading using opposite Air Products and Sika AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Sika 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 Sika AG will offset losses from the drop in Sika AG'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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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