Correlation Between Air Products and Coor Service

Can any of the company-specific risk be diversified away by investing in both Air Products and Coor Service 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 Coor Service 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 Coor Service Management, you can compare the effects of market volatilities on Air Products and Coor Service 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 Coor Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Coor Service.

Diversification Opportunities for Air Products and Coor Service

-0.69

Correlation Coefficient

Air Products  Coor Service

Excellent diversification

The 3 months correlation between Air and Coor is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Coor Service Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coor Service Management 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 Coor Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coor Service Management has no effect on the direction of Air Products i.e., Air Products and Coor Service go up and down completely randomly.

Pair Corralation between Air Products and Coor Service

Assuming the 90 days trading horizon Air Products is expected to generate 2.67 times less return on investment than Coor Service. But when comparing it to its historical volatility, Air Products Chemicals is 1.6 times less risky than Coor Service. It trades about 0.01 of its potential returns per unit of risk. Coor Service Management is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,323  in Coor Service Management on December 20, 2024 and sell it today you would lose (21.00) from holding Coor Service Management or give up 0.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Air Products Chemicals  vs.  Coor Service Management

Air Products Chemicals

Risk-Adjusted Performance

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 comparatively stable basic indicators, Air Products is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Coor Service Management

Risk-Adjusted Performance

Weak

Over the last 90 days Coor Service Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Coor Service is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Air Products and Coor Service

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

The idea behind Air Products Chemicals and Coor Service Management 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.