Correlation Between Air Products and Rightmove PLC

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

Diversification Opportunities for Air Products and Rightmove PLC

0.0

Correlation Coefficient

Air Products  Rightmove PLC

Pay attention - limited upside

The 3 months correlation between Air and Rightmove is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Rightmove PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rightmove PLC 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 Rightmove PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rightmove PLC has no effect on the direction of Air Products i.e., Air Products and Rightmove PLC go up and down completely randomly.

Pair Corralation between Air Products and Rightmove PLC

Assuming the 90 days trading horizon Air Products is expected to generate 3.84 times less return on investment than Rightmove PLC. In addition to that, Air Products is 1.01 times more volatile than Rightmove PLC. It trades about 0.02 of its total potential returns per unit of risk. Rightmove PLC is currently generating about 0.07 per unit of volatility. If you would invest  64,700  in Rightmove PLC on December 30, 2024 and sell it today you would earn a total of  4,100  from holding Rightmove PLC or generate 6.34% return on investment over 90 days.

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

Air Products Chemicals  vs.  Rightmove PLC

Air Products Chemicals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products Chemicals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Rightmove PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rightmove PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Rightmove PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Air Products and Rightmove PLC

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

The idea behind Air Products Chemicals and Rightmove PLC 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.