Correlation Between Alstria Office and Air Products

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

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

Diversification Opportunities for Alstria Office and Air Products

-0.14

Correlation Coefficient

Alstria Office  Air Products

Good diversification

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

Pair Corralation between Alstria Office and Air Products

Assuming the 90 days trading horizon Alstria Office is expected to generate 1.86 times less return on investment than Air Products. But when comparing it to its historical volatility, alstria office REIT AG is 1.47 times less risky than Air Products. It trades about 0.01 of its potential returns per unit of risk. Air Products Chemicals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  30,952  in Air Products Chemicals on October 5, 2024 and sell it today you would lose (2,562) from holding Air Products Chemicals or give up 8.28% of portfolio value over 90 days.

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

alstria office REIT AG  vs.  Air Products Chemicals

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.

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.

Pair Trading with Alstria Office and Air Products

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

The idea behind alstria office REIT AG and Air Products Chemicals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.