Correlation Between Air Liquide and Vranken Pommery

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

Diversification Opportunities for Air Liquide and Vranken Pommery

0.83

Correlation Coefficient

Air Liquide  Vranken Pommery

Very poor diversification

The 3 months correlation between Air and Vranken is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and Vranken Pommery Monopole Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vranken Pommery Mono 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 Vranken Pommery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vranken Pommery Mono has no effect on the direction of Air Liquide i.e., Air Liquide and Vranken Pommery go up and down completely randomly.

Pair Corralation between Air Liquide and Vranken Pommery

Assuming the 90 days horizon Air Liquide SA is expected to under-perform the Vranken Pommery. But the stock apears to be less risky and, when comparing its historical volatility, Air Liquide SA is 1.76 times less risky than Vranken Pommery. The stock trades about -0.08 of its potential returns per unit of risk. The Vranken Pommery Monopole Socit is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,275  in Vranken Pommery Monopole Socit on October 10, 2024 and sell it today you would earn a total of  75.00  from holding Vranken Pommery Monopole Socit or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Air Liquide SA  vs.  Vranken Pommery Monopole Socit

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.

Vranken Pommery Mono

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vranken Pommery Monopole Socit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vranken Pommery 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 Vranken Pommery

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

The idea behind Air Liquide SA and Vranken Pommery Monopole Socit 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .