Correlation Between UNITED UTILITIES and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and AIR PRODCHEMICALS 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 UNITED UTILITIES and AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED UTILITIES GR and AIR PRODCHEMICALS, you can compare the effects of market volatilities on UNITED UTILITIES and AIR PRODCHEMICALS 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 UNITED UTILITIES with a short position of AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and AIR PRODCHEMICALS.
Diversification Opportunities for UNITED UTILITIES and AIR PRODCHEMICALS
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and AIR is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS and UNITED UTILITIES 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 UNITED UTILITIES GR are associated (or correlated) with AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and AIR PRODCHEMICALS
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to generate 0.9 times more return on investment than AIR PRODCHEMICALS. However, UNITED UTILITIES GR is 1.11 times less risky than AIR PRODCHEMICALS. It trades about 0.04 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.02 per unit of risk. If you would invest 1,084 in UNITED UTILITIES GR on September 3, 2024 and sell it today you would earn a total of 256.00 from holding UNITED UTILITIES GR or generate 23.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. AIR PRODCHEMICALS
Performance |
| Timeline |
| UNITED UTILITIES |
| AIR PRODCHEMICALS |
UNITED UTILITIES and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and AIR PRODCHEMICALS
The main advantage of trading using opposite UNITED UTILITIES and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, AIR PRODCHEMICALS 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 PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| UNITED UTILITIES vs. ANTA SPORTS PRODUCT | UNITED UTILITIES vs. Transport International Holdings | UNITED UTILITIES vs. Sqs Software Quality | UNITED UTILITIES vs. PSI Software AG |
| AIR PRODCHEMICALS vs. Tsingtao Brewery | AIR PRODCHEMICALS vs. Broadwind | AIR PRODCHEMICALS vs. National Beverage Corp | AIR PRODCHEMICALS vs. United Breweries Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |