Correlation Between Novozymes A/S and Air Products
Can any of the company-specific risk be diversified away by investing in both Novozymes A/S 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 Novozymes A/S and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novozymes AS B and Air Products and, you can compare the effects of market volatilities on Novozymes A/S 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 Novozymes A/S with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novozymes A/S and Air Products.
Diversification Opportunities for Novozymes A/S and Air Products
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Novozymes and Air is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Novozymes AS B and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Novozymes A/S 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 Novozymes AS B 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 Novozymes A/S i.e., Novozymes A/S and Air Products go up and down completely randomly.
Pair Corralation between Novozymes A/S and Air Products
Assuming the 90 days horizon Novozymes AS B is expected to under-perform the Air Products. In addition to that, Novozymes A/S is 2.22 times more volatile than Air Products and. It trades about -0.17 of its total potential returns per unit of risk. Air Products and is currently generating about 0.03 per unit of volatility. If you would invest 32,662 in Air Products and on August 24, 2024 and sell it today you would earn a total of 223.00 from holding Air Products and or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novozymes AS B vs. Air Products and
Performance |
| Timeline |
| Novozymes AS B |
| Air Products |
Novozymes A/S and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novozymes A/S and Air Products
The main advantage of trading using opposite Novozymes A/S and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novozymes A/S 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.| Novozymes A/S vs. Symrise Ag PK | Novozymes A/S vs. Givaudan SA | Novozymes A/S vs. Sika AG | Novozymes A/S vs. Sika AG ADR |
| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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