Correlation Between Evonik Industries and Air Liquide
Can any of the company-specific risk be diversified away by investing in both Evonik Industries and Air Liquide 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 Evonik Industries and Air Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evonik Industries AG and Air Liquide SA, you can compare the effects of market volatilities on Evonik Industries and Air Liquide 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 Evonik Industries with a short position of Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evonik Industries and Air Liquide.
Diversification Opportunities for Evonik Industries and Air Liquide
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Evonik and Air is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Evonik Industries AG and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA and Evonik Industries 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 Evonik Industries AG are associated (or correlated) with Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Evonik Industries i.e., Evonik Industries and Air Liquide go up and down completely randomly.
Pair Corralation between Evonik Industries and Air Liquide
Assuming the 90 days horizon Evonik Industries AG is expected to generate 1.97 times more return on investment than Air Liquide. However, Evonik Industries is 1.97 times more volatile than Air Liquide SA. It trades about -0.08 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.15 per unit of risk. If you would invest 2,100 in Evonik Industries AG on September 12, 2024 and sell it today you would lose (250.00) from holding Evonik Industries AG or give up 11.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evonik Industries AG vs. Air Liquide SA
Performance |
| Timeline |
| Evonik Industries |
| Air Liquide SA |
Evonik Industries and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evonik Industries and Air Liquide
The main advantage of trading using opposite Evonik Industries and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evonik Industries position performs unexpectedly, Air Liquide 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 Liquide will offset losses from the drop in Air Liquide's long position.| Evonik Industries vs. Symrise Ag PK | Evonik Industries vs. Fuchs Petrolub SE | Evonik Industries vs. Innospec | Evonik Industries vs. Air Liquide SA |
| Air Liquide vs. Asia Carbon Industries | Air Liquide vs. Akzo Nobel NV | Air Liquide vs. Avoca LLC | Air Liquide vs. AGC Inc ADR |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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