Correlation Between Air Products and Primary Health

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

Diversification Opportunities for Air Products and Primary Health

-0.12

Correlation Coefficient

Air Products  Primary Health

Good diversification

The 3 months correlation between Air and Primary is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Primary Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primary Health Properties 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 Primary Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primary Health Properties has no effect on the direction of Air Products i.e., Air Products and Primary Health go up and down completely randomly.

Pair Corralation between Air Products and Primary Health

Assuming the 90 days trading horizon Air Products is expected to generate 9.65 times less return on investment than Primary Health. In addition to that, Air Products is 1.06 times more volatile than Primary Health Properties. It trades about 0.01 of its total potential returns per unit of risk. Primary Health Properties is currently generating about 0.07 per unit of volatility. If you would invest  9,133  in Primary Health Properties on December 22, 2024 and sell it today you would earn a total of  502.00  from holding Primary Health Properties or generate 5.5% return on investment over 90 days.

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

Air Products Chemicals  vs.  Primary Health Properties

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Primary Health Properties

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Primary Health Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Primary Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Air Products and Primary Health

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

The idea behind Air Products Chemicals and Primary Health Properties 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.