Correlation Between Air Liquide and Laurent Perrier

Can any of the company-specific risk be diversified away by investing in both Air Liquide and Laurent Perrier 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 Laurent Perrier 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 Laurent Perrier, you can compare the effects of market volatilities on Air Liquide and Laurent Perrier 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 Laurent Perrier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and Laurent Perrier.

Diversification Opportunities for Air Liquide and Laurent Perrier

-0.15

Correlation Coefficient

Air Liquide  Laurent Perrier

Good diversification

The 3 months correlation between Air and Laurent is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and Laurent Perrier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurent Perrier 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 Laurent Perrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurent Perrier has no effect on the direction of Air Liquide i.e., Air Liquide and Laurent Perrier go up and down completely randomly.

Pair Corralation between Air Liquide and Laurent Perrier

Assuming the 90 days horizon Air Liquide SA is expected to under-perform the Laurent Perrier. But the stock apears to be less risky and, when comparing its historical volatility, Air Liquide SA is 1.1 times less risky than Laurent Perrier. The stock trades about -0.08 of its potential returns per unit of risk. The Laurent Perrier is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  10,000  in Laurent Perrier on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Laurent Perrier or generate 0.0% return on investment over 90 days.

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

Air Liquide SA  vs.  Laurent Perrier

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 somewhat strong basic indicators, Air Liquide is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Laurent Perrier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laurent Perrier has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Laurent Perrier 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 Laurent Perrier

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

The idea behind Air Liquide SA and Laurent Perrier 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.