Correlation Between Pernod Ricard and Air Liquide
Can any of the company-specific risk be diversified away by investing in both Pernod Ricard 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 Pernod Ricard and Air Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pernod Ricard SA and Air Liquide SA, you can compare the effects of market volatilities on Pernod Ricard 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 Pernod Ricard with a short position of Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pernod Ricard and Air Liquide.
Diversification Opportunities for Pernod Ricard and Air Liquide
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pernod and Air is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA 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 Pernod Ricard 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 Pernod Ricard SA 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 Pernod Ricard i.e., Pernod Ricard and Air Liquide go up and down completely randomly.
Pair Corralation between Pernod Ricard and Air Liquide
Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Air Liquide. In addition to that, Pernod Ricard is 1.24 times more volatile than Air Liquide SA. It trades about -0.07 of its total potential returns per unit of risk. Air Liquide SA is currently generating about 0.05 per unit of volatility. If you would invest 12,326 in Air Liquide SA on August 23, 2024 and sell it today you would earn a total of 3,600 from holding Air Liquide SA or generate 29.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pernod Ricard SA vs. Air Liquide SA
Performance |
| Timeline |
| Pernod Ricard SA |
| Air Liquide SA |
Pernod Ricard and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pernod Ricard and Air Liquide
The main advantage of trading using opposite Pernod Ricard and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pernod Ricard 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.| Pernod Ricard vs. LOreal SA | Pernod Ricard vs. Danone SA | Pernod Ricard vs. Compagnie Generale des | Pernod Ricard vs. Air Liquide SA |
| Air Liquide vs. Sanofi SA | Air Liquide vs. LOreal SA | Air Liquide vs. Vinci SA | Air Liquide vs. Schneider Electric SE |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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