Correlation Between HEALTHCARE TRPFD and AIR PRODCHEMICALS

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

By analyzing existing cross correlation between HEALTHCARE TRPFD SH and AIR PRODCHEMICALS, you can compare the effects of market volatilities on HEALTHCARE TRPFD and AIR PRODCHEMICALS 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 HEALTHCARE TRPFD with a short position of AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHCARE TRPFD and AIR PRODCHEMICALS.

Diversification Opportunities for HEALTHCARE TRPFD and AIR PRODCHEMICALS

0.48

Correlation Coefficient

HEALTHCARE TRPFD  AIR PRODCHEMICALS

Very weak diversification

The 3 months correlation between HEALTHCARE and AIR is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHCARE TRPFD SH and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS and HEALTHCARE TRPFD 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 HEALTHCARE TRPFD SH are associated (or correlated) with AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of HEALTHCARE TRPFD i.e., HEALTHCARE TRPFD and AIR PRODCHEMICALS go up and down completely randomly.

Pair Corralation between HEALTHCARE TRPFD and AIR PRODCHEMICALS

Assuming the 90 days horizon HEALTHCARE TRPFD SH is expected to under-perform the AIR PRODCHEMICALS. In addition to that, HEALTHCARE TRPFD is 1.69 times more volatile than AIR PRODCHEMICALS. It trades about 0.0 of its total potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.01 per unit of volatility. If you would invest  27,356  in AIR PRODCHEMICALS on September 27, 2024 and sell it today you would earn a total of  914.00  from holding AIR PRODCHEMICALS or generate 3.34% return on investment over 90 days.

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

HEALTHCARE TRPFD SH  vs.  AIR PRODCHEMICALS

HEALTHCARE TRPFD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEALTHCARE TRPFD SH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HEALTHCARE TRPFD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AIR PRODCHEMICALS

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with HEALTHCARE TRPFD and AIR PRODCHEMICALS

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

The idea behind HEALTHCARE TRPFD SH and AIR PRODCHEMICALS 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.