Correlation Between Air Products and Alstria Office

Can any of the company-specific risk be diversified away by investing in both Air Products and Alstria Office 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 Air Products and Alstria Office into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Products Chemicals and alstria office REIT AG, you can compare the effects of market volatilities on Air Products and Alstria Office 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 Air Products with a short position of Alstria Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Alstria Office.

Diversification Opportunities for Air Products and Alstria Office

-0.14

Correlation Coefficient

Air Products  Alstria Office

Good diversification

The 3 months correlation between Air and Alstria is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and alstria office REIT AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alstria office REIT and Air Products 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 Air Products Chemicals are associated (or correlated) with Alstria Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alstria office REIT has no effect on the direction of Air Products i.e., Air Products and Alstria Office go up and down completely randomly.

Pair Corralation between Air Products and Alstria Office

Assuming the 90 days trading horizon Air Products is expected to generate 1.07 times less return on investment than Alstria Office. In addition to that, Air Products is 1.6 times more volatile than alstria office REIT AG. It trades about 0.03 of its total potential returns per unit of risk. alstria office REIT AG is currently generating about 0.06 per unit of volatility. If you would invest  334.00  in alstria office REIT AG on October 5, 2024 and sell it today you would earn a total of  197.00  from holding alstria office REIT AG or generate 58.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Air Products Chemicals  vs.  alstria office REIT AG

Air Products Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air Products Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

alstria office REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days alstria office REIT AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Alstria Office is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Air Products and Alstria Office

The main advantage of trading using opposite Air Products and Alstria Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Alstria Office 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 Alstria Office will offset losses from the drop in Alstria Office's long position.

The idea behind Air Products Chemicals and alstria office REIT AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.