Correlation Between LAir Liquide and FEMALE HEALTH

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

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

Diversification Opportunities for LAir Liquide and FEMALE HEALTH

0.61

Correlation Coefficient

LAir Liquide  FEMALE HEALTH

Poor diversification

The 3 months correlation between LAir and FEMALE is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH and LAir 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 LAir Liquide SA are associated (or correlated) with FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of LAir Liquide i.e., LAir Liquide and FEMALE HEALTH go up and down completely randomly.

Pair Corralation between LAir Liquide and FEMALE HEALTH

Assuming the 90 days trading horizon LAir Liquide SA is expected to generate 0.18 times more return on investment than FEMALE HEALTH. However, LAir Liquide SA is 5.46 times less risky than FEMALE HEALTH. It trades about 0.06 of its potential returns per unit of risk. FEMALE HEALTH is currently generating about -0.04 per unit of risk. If you would invest  11,761  in LAir Liquide SA on September 20, 2024 and sell it today you would earn a total of  3,733  from holding LAir Liquide SA or generate 31.74% return on investment over 90 days.

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

LAir Liquide SA  vs.  FEMALE HEALTH

LAir Liquide SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAir Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LAir Liquide is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, FEMALE HEALTH is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LAir Liquide and FEMALE HEALTH

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

The idea behind LAir Liquide SA and FEMALE HEALTH 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.