Correlation Between GVS SPA and AIR PRODCHEMICALS

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

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

Diversification Opportunities for GVS SPA and AIR PRODCHEMICALS

-0.73

Correlation Coefficient

GVS SPA  AIR PRODCHEMICALS

Pay attention - limited upside

The 3 months correlation between GVS and AIR is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding GVS SPA and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS and GVS SPA 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 GVS SPA 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 GVS SPA i.e., GVS SPA and AIR PRODCHEMICALS go up and down completely randomly.

Pair Corralation between GVS SPA and AIR PRODCHEMICALS

Assuming the 90 days horizon GVS SPA is expected to under-perform the AIR PRODCHEMICALS. In addition to that, GVS SPA is 3.0 times more volatile than AIR PRODCHEMICALS. It trades about -0.1 of its total potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.03 per unit of volatility. If you would invest  29,600  in AIR PRODCHEMICALS on September 15, 2024 and sell it today you would earn a total of  150.00  from holding AIR PRODCHEMICALS or generate 0.51% return on investment over 90 days.

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

GVS SPA  vs.  AIR PRODCHEMICALS

GVS SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GVS SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AIR PRODCHEMICALS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIR PRODCHEMICALS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AIR PRODCHEMICALS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GVS SPA and AIR PRODCHEMICALS

The main advantage of trading using opposite GVS SPA and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GVS SPA 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 GVS SPA 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.