Correlation Between LAir Liquide and Ur Energy

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

Diversification Opportunities for LAir Liquide and Ur Energy

-0.54

Correlation Coefficient

LAir Liquide  Ur Energy

Excellent diversification

The 3 months correlation between LAir and U9T is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and Ur Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ur Energy 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 Ur Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ur Energy has no effect on the direction of LAir Liquide i.e., LAir Liquide and Ur Energy go up and down completely randomly.

Pair Corralation between LAir Liquide and Ur Energy

Assuming the 90 days trading horizon LAir Liquide SA is expected to generate 0.24 times more return on investment than Ur Energy. However, LAir Liquide SA is 4.21 times less risky than Ur Energy. It trades about -0.14 of its potential returns per unit of risk. Ur Energy is currently generating about -0.09 per unit of risk. If you would invest  15,888  in LAir Liquide SA on September 20, 2024 and sell it today you would lose (394.00) from holding LAir Liquide SA or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

LAir Liquide SA  vs.  Ur Energy

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.

Ur Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ur Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ur Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LAir Liquide and Ur Energy

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

The idea behind LAir Liquide SA and Ur Energy 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.