Correlation Between Hansa Investment and Air Products
Can any of the company-specific risk be diversified away by investing in both Hansa Investment 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 Hansa Investment and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hansa Investment and Air Products Chemicals, you can compare the effects of market volatilities on Hansa Investment 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 Hansa Investment with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hansa Investment and Air Products.
Diversification Opportunities for Hansa Investment and Air Products
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hansa and Air is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hansa Investment 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 Hansa Investment 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 Hansa Investment 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 Hansa Investment i.e., Hansa Investment and Air Products go up and down completely randomly.
Pair Corralation between Hansa Investment and Air Products
Assuming the 90 days trading horizon Hansa Investment is expected to generate 2.39 times less return on investment than Air Products. But when comparing it to its historical volatility, Hansa Investment is 3.34 times less risky than Air Products. It trades about 0.04 of its potential returns per unit of risk. Air Products Chemicals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 29,863 in Air Products Chemicals on September 3, 2024 and sell it today you would earn a total of 3,366 from holding Air Products Chemicals or generate 11.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Hansa Investment vs. Air Products Chemicals
Performance |
| Timeline |
| Hansa Investment |
| Air Products Chemicals |
Hansa Investment and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hansa Investment and Air Products
The main advantage of trading using opposite Hansa Investment and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hansa Investment 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.| Hansa Investment vs. Hansa Biopharma AB | Hansa Investment vs. Hansa Trust | Hansa Investment vs. Eastman Chemical Co | Hansa Investment vs. American Tower REIT |
| Air Products vs. Morgan Advanced Materials | Air Products vs. Applied Materials | Air Products vs. Compagnie Plastic Omnium | Air Products vs. Spirent Communications plc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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