Correlation Between VARIOUS EATERIES and AIR LIQUIDE

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

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

Diversification Opportunities for VARIOUS EATERIES and AIR LIQUIDE

0.53

Correlation Coefficient

VARIOUS EATERIES  AIR LIQUIDE

Very weak diversification

The 3 months correlation between VARIOUS and AIR is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS 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 VARIOUS EATERIES 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 VARIOUS EATERIES LS 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 VARIOUS EATERIES i.e., VARIOUS EATERIES and AIR LIQUIDE go up and down completely randomly.

Pair Corralation between VARIOUS EATERIES and AIR LIQUIDE

Assuming the 90 days horizon VARIOUS EATERIES LS is expected to under-perform the AIR LIQUIDE. In addition to that, VARIOUS EATERIES is 1.3 times more volatile than AIR LIQUIDE ADR. It trades about -0.05 of its total potential returns per unit of risk. AIR LIQUIDE ADR is currently generating about 0.03 per unit of volatility. If you would invest  2,466  in AIR LIQUIDE ADR on October 12, 2024 and sell it today you would earn a total of  634.00  from holding AIR LIQUIDE ADR or generate 25.71% return on investment over 90 days.

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

VARIOUS EATERIES LS  vs.  AIR LIQUIDE ADR

VARIOUS EATERIES

Risk-Adjusted Performance

0 of 100

Very Weak

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

AIR LIQUIDE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIR LIQUIDE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with VARIOUS EATERIES and AIR LIQUIDE

The main advantage of trading using opposite VARIOUS EATERIES and AIR LIQUIDE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VARIOUS EATERIES 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 VARIOUS EATERIES LS 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.