Correlation Between Koppers Holdings and Air Products
Can any of the company-specific risk be diversified away by investing in both Koppers Holdings 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 Koppers Holdings and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koppers Holdings and Air Products and, you can compare the effects of market volatilities on Koppers Holdings 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 Koppers Holdings with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koppers Holdings and Air Products.
Diversification Opportunities for Koppers Holdings and Air Products
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Koppers and Air is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Koppers Holdings and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Koppers Holdings 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 Koppers Holdings 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 has no effect on the direction of Koppers Holdings i.e., Koppers Holdings and Air Products go up and down completely randomly.
Pair Corralation between Koppers Holdings and Air Products
Considering the 90-day investment horizon Koppers Holdings is expected to generate 3.06 times more return on investment than Air Products. However, Koppers Holdings is 3.06 times more volatile than Air Products and. It trades about 0.16 of its potential returns per unit of risk. Air Products and is currently generating about 0.2 per unit of risk. If you would invest 3,481 in Koppers Holdings on August 27, 2024 and sell it today you would earn a total of 343.00 from holding Koppers Holdings or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koppers Holdings vs. Air Products and
Performance |
| Timeline |
| Koppers Holdings |
| Air Products |
Koppers Holdings and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koppers Holdings and Air Products
The main advantage of trading using opposite Koppers Holdings and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koppers Holdings 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.| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
| Air Products vs. PPG Industries | Air Products vs. Ecolab Inc | Air Products vs. Sherwin Williams Co | Air Products vs. LyondellBasell Industries NV |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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