Correlation Between Ganfeng Lithium and AIR LIQUIDE

Can any of the company-specific risk be diversified away by investing in both Ganfeng Lithium and AIR LIQUIDE 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 Ganfeng Lithium and AIR LIQUIDE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ganfeng Lithium Co and AIR LIQUIDE ADR, you can compare the effects of market volatilities on Ganfeng Lithium and AIR LIQUIDE 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 Ganfeng Lithium with a short position of AIR LIQUIDE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ganfeng Lithium and AIR LIQUIDE.

Diversification Opportunities for Ganfeng Lithium and AIR LIQUIDE

0.6

Correlation Coefficient

Ganfeng Lithium  AIR LIQUIDE

Poor diversification

The 3 months correlation between Ganfeng and AIR is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ganfeng Lithium Co and AIR LIQUIDE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR LIQUIDE ADR and Ganfeng Lithium 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 Ganfeng Lithium Co are associated (or correlated) with AIR LIQUIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR LIQUIDE ADR has no effect on the direction of Ganfeng Lithium i.e., Ganfeng Lithium and AIR LIQUIDE go up and down completely randomly.

Pair Corralation between Ganfeng Lithium and AIR LIQUIDE

Assuming the 90 days trading horizon Ganfeng Lithium is expected to generate 13.25 times less return on investment than AIR LIQUIDE. In addition to that, Ganfeng Lithium is 1.72 times more volatile than AIR LIQUIDE ADR. It trades about 0.01 of its total potential returns per unit of risk. AIR LIQUIDE ADR is currently generating about 0.14 per unit of volatility. If you would invest  3,060  in AIR LIQUIDE ADR on December 29, 2024 and sell it today you would earn a total of  420.00  from holding AIR LIQUIDE ADR or generate 13.73% return on investment over 90 days.

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

Ganfeng Lithium Co  vs.  AIR LIQUIDE ADR

Ganfeng Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ganfeng Lithium Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ganfeng Lithium is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

AIR LIQUIDE ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AIR LIQUIDE ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, AIR LIQUIDE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ganfeng Lithium and AIR LIQUIDE

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

The idea behind Ganfeng Lithium Co and AIR LIQUIDE ADR 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.