Correlation Between HP and Air Liquide
Can any of the company-specific risk be diversified away by investing in both HP 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 HP and Air Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Air Liquide SA, you can compare the effects of market volatilities on HP 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 HP with a short position of Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Air Liquide.
Diversification Opportunities for HP and Air Liquide
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HP and Air is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc 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 HP 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 HP Inc 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 HP i.e., HP and Air Liquide go up and down completely randomly.
Pair Corralation between HP and Air Liquide
Considering the 90-day investment horizon HP Inc is expected to generate 1.35 times more return on investment than Air Liquide. However, HP is 1.35 times more volatile than Air Liquide SA. It trades about 0.07 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.02 per unit of risk. If you would invest 2,836 in HP Inc on August 26, 2024 and sell it today you would earn a total of 977.00 from holding HP Inc or generate 34.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Air Liquide SA
Performance |
| Timeline |
| HP Inc |
| Air Liquide SA |
HP and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Air Liquide
The main advantage of trading using opposite HP and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP 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.The idea behind HP Inc and Air Liquide SA 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.| 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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