Correlation Between PureTech Health and Air Products
Can any of the company-specific risk be diversified away by investing in both PureTech Health 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 PureTech Health and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and Air Products Chemicals, you can compare the effects of market volatilities on PureTech Health 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 PureTech Health with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Air Products.
Diversification Opportunities for PureTech Health and Air Products
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PureTech and Air is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc 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 PureTech Health 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 PureTech Health plc 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 PureTech Health i.e., PureTech Health and Air Products go up and down completely randomly.
Pair Corralation between PureTech Health and Air Products
Assuming the 90 days trading horizon PureTech Health plc is expected to under-perform the Air Products. In addition to that, PureTech Health is 1.36 times more volatile than Air Products Chemicals. It trades about -0.06 of its total potential returns per unit of risk. Air Products Chemicals is currently generating about 0.53 per unit of volatility. If you would invest 28,390 in Air Products Chemicals on November 3, 2024 and sell it today you would earn a total of 5,190 from holding Air Products Chemicals or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PureTech Health plc vs. Air Products Chemicals
Performance |
| Timeline |
| PureTech Health plc |
| Air Products Chemicals |
PureTech Health and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PureTech Health and Air Products
The main advantage of trading using opposite PureTech Health and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health 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.| PureTech Health vs. Commerzbank AG | PureTech Health vs. St Galler Kantonalbank | PureTech Health vs. Foresight Environmental Infrastructure | PureTech Health vs. JLEN Environmental Assets |
| Air Products vs. National Beverage Corp | Air Products vs. Associated British Foods | Air Products vs. CAP LEASE AVIATION | Air Products vs. Geely Automobile Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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