Correlation Between Hermes International and Air Liquide
Can any of the company-specific risk be diversified away by investing in both Hermes International 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 Hermes International and Air Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hermes International SCA and Air Liquide SA, you can compare the effects of market volatilities on Hermes International 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 Hermes International with a short position of Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermes International and Air Liquide.
Diversification Opportunities for Hermes International and Air Liquide
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hermes and Air is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hermes International SCA 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 Hermes International 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 Hermes International SCA 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 Hermes International i.e., Hermes International and Air Liquide go up and down completely randomly.
Pair Corralation between Hermes International and Air Liquide
Assuming the 90 days trading horizon Hermes International SCA is expected to generate 1.46 times more return on investment than Air Liquide. However, Hermes International is 1.46 times more volatile than Air Liquide SA. It trades about -0.11 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.17 per unit of risk. If you would invest 210,500 in Hermes International SCA on August 26, 2024 and sell it today you would lose (8,500) from holding Hermes International SCA or give up 4.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hermes International SCA vs. Air Liquide SA
Performance |
| Timeline |
| Hermes International SCA |
| Air Liquide SA |
Hermes International and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hermes International and Air Liquide
The main advantage of trading using opposite Hermes International and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermes International 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.| Hermes International vs. FIPP SA | Hermes International vs. Adomos SA | Hermes International vs. Acanthe Dveloppement | Hermes International vs. Acheter Louer |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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