Correlation Between Air Products and 172967KM2

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Can any of the company-specific risk be diversified away by investing in both Air Products and 172967KM2 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 172967KM2 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 C 625, you can compare the effects of market volatilities on Air Products and 172967KM2 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 172967KM2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and 172967KM2.

Diversification Opportunities for Air Products and 172967KM2

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between Air and 172967KM2 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and C 625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 172967KM2 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 172967KM2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 172967KM2 has no effect on the direction of Air Products i.e., Air Products and 172967KM2 go up and down completely randomly.

Pair Corralation between Air Products and 172967KM2

Considering the 90-day investment horizon Air Products and is expected to generate 1.87 times more return on investment than 172967KM2. However, Air Products is 1.87 times more volatile than C 625. It trades about 0.04 of its potential returns per unit of risk. C 625 is currently generating about 0.0 per unit of risk. If you would invest  26,836  in Air Products and on September 4, 2024 and sell it today you would earn a total of  6,726  from holding Air Products and or generate 25.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.93%
ValuesDaily Returns

Air Products and  vs.  C 625

 Performance 
       Timeline  
Air Products 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Air Products exhibited solid returns over the last few months and may actually be approaching a breakup point.
172967KM2 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days C 625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 172967KM2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Air Products and 172967KM2 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Air Products and 172967KM2

The main advantage of trading using opposite Air Products and 172967KM2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, 172967KM2 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 172967KM2 will offset losses from the drop in 172967KM2's long position.
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The idea behind Air Products and and C 625 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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