Correlation Between Capital Metals and Air Products
Can any of the company-specific risk be diversified away by investing in both Capital Metals and Air Products 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 Capital Metals and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Metals PLC and Air Products Chemicals, you can compare the effects of market volatilities on Capital Metals and Air Products 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 Capital Metals with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and Air Products.
Diversification Opportunities for Capital Metals and Air Products
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capital and Air is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Capital Metals 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 Capital Metals PLC are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Capital Metals i.e., Capital Metals and Air Products go up and down completely randomly.
Pair Corralation between Capital Metals and Air Products
Assuming the 90 days trading horizon Capital Metals PLC is expected to under-perform the Air Products. In addition to that, Capital Metals is 1.42 times more volatile than Air Products Chemicals. It trades about -0.32 of its total potential returns per unit of risk. Air Products Chemicals is currently generating about -0.35 per unit of volatility. If you would invest 31,574 in Air Products Chemicals on October 10, 2024 and sell it today you would lose (2,646) from holding Air Products Chemicals or give up 8.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Capital Metals PLC vs. Air Products Chemicals
Performance |
| Timeline |
| Capital Metals PLC |
| Air Products Chemicals |
Capital Metals and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Metals and Air Products
The main advantage of trading using opposite Capital Metals and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Capital Metals vs. Givaudan SA | Capital Metals vs. Antofagasta PLC | Capital Metals vs. Ferrexpo PLC | Capital Metals vs. Atalaya Mining |
| Air Products vs. Iron Mountain | Air Products vs. Cizzle Biotechnology Holdings | Air Products vs. Odfjell Drilling | Air Products vs. Veolia Environnement VE |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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