Correlation Between Air Liquide and Bonduelle SCA

Can any of the company-specific risk be diversified away by investing in both Air Liquide and Bonduelle SCA 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 Air Liquide and Bonduelle SCA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Liquide SA and Bonduelle SCA, you can compare the effects of market volatilities on Air Liquide and Bonduelle SCA 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 Air Liquide with a short position of Bonduelle SCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and Bonduelle SCA.

Diversification Opportunities for Air Liquide and Bonduelle SCA

0.79

Correlation Coefficient

Air Liquide  Bonduelle SCA

Poor diversification

The 3 months correlation between Air and Bonduelle is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and Bonduelle SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonduelle SCA and Air Liquide 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 Air Liquide SA are associated (or correlated) with Bonduelle SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonduelle SCA has no effect on the direction of Air Liquide i.e., Air Liquide and Bonduelle SCA go up and down completely randomly.

Pair Corralation between Air Liquide and Bonduelle SCA

Assuming the 90 days horizon Air Liquide SA is expected to under-perform the Bonduelle SCA. But the stock apears to be less risky and, when comparing its historical volatility, Air Liquide SA is 2.02 times less risky than Bonduelle SCA. The stock trades about -0.2 of its potential returns per unit of risk. The Bonduelle SCA is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  650.00  in Bonduelle SCA on September 23, 2024 and sell it today you would lose (20.00) from holding Bonduelle SCA or give up 3.08% of portfolio value over 90 days.

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

Air Liquide SA  vs.  Bonduelle SCA

Air Liquide SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bonduelle SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bonduelle SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bonduelle SCA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Air Liquide and Bonduelle SCA

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

The idea behind Air Liquide SA and Bonduelle SCA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.