Correlation Between AirBoss Of and Akzo Nobel

Can any of the company-specific risk be diversified away by investing in both AirBoss Of and Akzo Nobel 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 AirBoss Of and Akzo Nobel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AirBoss of America and Akzo Nobel NV, you can compare the effects of market volatilities on AirBoss Of and Akzo Nobel 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 AirBoss Of with a short position of Akzo Nobel. Check out your portfolio center. Please also check ongoing floating volatility patterns of AirBoss Of and Akzo Nobel.

Diversification Opportunities for AirBoss Of and Akzo Nobel

0.46

Correlation Coefficient

AirBoss Of  Akzo Nobel

Very weak diversification

The 3 months correlation between AirBoss and Akzo is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding AirBoss of America and Akzo Nobel NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akzo Nobel NV and AirBoss Of 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 AirBoss of America are associated (or correlated) with Akzo Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akzo Nobel NV has no effect on the direction of AirBoss Of i.e., AirBoss Of and Akzo Nobel go up and down completely randomly.

Pair Corralation between AirBoss Of and Akzo Nobel

Assuming the 90 days horizon AirBoss of America is expected to generate 1.18 times more return on investment than Akzo Nobel. However, AirBoss Of is 1.18 times more volatile than Akzo Nobel NV. It trades about -0.21 of its potential returns per unit of risk. Akzo Nobel NV is currently generating about -0.27 per unit of risk. If you would invest  300.00  in AirBoss of America on September 1, 2024 and sell it today you would lose (28.00) from holding AirBoss of America or give up 9.33% of portfolio value over 90 days.

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

AirBoss of America  vs.  Akzo Nobel NV

AirBoss of America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AirBoss of America 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 December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Akzo Nobel NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Akzo Nobel NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Akzo Nobel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AirBoss Of and Akzo Nobel

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

The idea behind AirBoss of America and Akzo Nobel NV 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.