Correlation Between GEAR4MUSIC and AIR PRODCHEMICALS

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC and AIR PRODCHEMICALS 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 GEAR4MUSIC and AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEAR4MUSIC LS 10 and AIR PRODCHEMICALS, you can compare the effects of market volatilities on GEAR4MUSIC and AIR PRODCHEMICALS 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 GEAR4MUSIC with a short position of AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and AIR PRODCHEMICALS.

Diversification Opportunities for GEAR4MUSIC and AIR PRODCHEMICALS

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between GEAR4MUSIC and AIR is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS and GEAR4MUSIC 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 GEAR4MUSIC LS 10 are associated (or correlated) with AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of GEAR4MUSIC i.e., GEAR4MUSIC and AIR PRODCHEMICALS go up and down completely randomly.

Pair Corralation between GEAR4MUSIC and AIR PRODCHEMICALS

Assuming the 90 days horizon GEAR4MUSIC is expected to generate 6.26 times less return on investment than AIR PRODCHEMICALS. In addition to that, GEAR4MUSIC is 2.12 times more volatile than AIR PRODCHEMICALS. It trades about 0.03 of its total potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.42 per unit of volatility. If you would invest  28,740  in AIR PRODCHEMICALS on September 1, 2024 and sell it today you would earn a total of  2,890  from holding AIR PRODCHEMICALS or generate 10.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

GEAR4MUSIC LS 10  vs.  AIR PRODCHEMICALS

 Performance 
       Timeline  
GEAR4MUSIC LS 10 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GEAR4MUSIC LS 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
AIR PRODCHEMICALS 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in AIR PRODCHEMICALS are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AIR PRODCHEMICALS unveiled solid returns over the last few months and may actually be approaching a breakup point.

GEAR4MUSIC and AIR PRODCHEMICALS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GEAR4MUSIC and AIR PRODCHEMICALS

The main advantage of trading using opposite GEAR4MUSIC and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC position performs unexpectedly, AIR PRODCHEMICALS 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 PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.
The idea behind GEAR4MUSIC LS 10 and AIR PRODCHEMICALS 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.
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated