Correlation Between PPG Industries and LAir Liquide
Can any of the company-specific risk be diversified away by investing in both PPG Industries and LAir 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 PPG Industries and LAir Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPG Industries and LAir Liquide SA, you can compare the effects of market volatilities on PPG Industries and LAir 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 PPG Industries with a short position of LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPG Industries and LAir Liquide.
Diversification Opportunities for PPG Industries and LAir Liquide
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPG and LAir is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding PPG Industries and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA and PPG Industries 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 PPG Industries are associated (or correlated) with LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of PPG Industries i.e., PPG Industries and LAir Liquide go up and down completely randomly.
Pair Corralation between PPG Industries and LAir Liquide
Considering the 90-day investment horizon PPG Industries is expected to generate 10.24 times less return on investment than LAir Liquide. But when comparing it to its historical volatility, PPG Industries is 1.02 times less risky than LAir Liquide. It trades about 0.0 of its potential returns per unit of risk. LAir Liquide SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12,559 in LAir Liquide SA on August 30, 2024 and sell it today you would earn a total of 3,848 from holding LAir Liquide SA or generate 30.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PPG Industries vs. LAir Liquide SA
Performance |
| Timeline |
| PPG Industries |
| LAir Liquide SA |
PPG Industries and LAir Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPG Industries and LAir Liquide
The main advantage of trading using opposite PPG Industries and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPG Industries position performs unexpectedly, LAir 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 LAir Liquide will offset losses from the drop in LAir Liquide's long position.| PPG Industries vs. Air Products and | PPG Industries vs. Linde plc Ordinary | PPG Industries vs. Ecolab Inc | PPG Industries vs. LyondellBasell Industries NV |
| LAir Liquide vs. Akzo Nobel NV | LAir Liquide vs. Avoca LLC | LAir Liquide vs. Arkema SA ADR | LAir Liquide vs. HUMANA INC |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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