Correlation Between Air Liquide and EMBARK EDUCATION

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

Diversification Opportunities for Air Liquide and EMBARK EDUCATION

-0.57

Correlation Coefficient

Air Liquide  EMBARK EDUCATION

Excellent diversification

The 3 months correlation between Air and EMBARK is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and EMBARK EDUCATION LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBARK EDUCATION LTD 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 EMBARK EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBARK EDUCATION LTD has no effect on the direction of Air Liquide i.e., Air Liquide and EMBARK EDUCATION go up and down completely randomly.

Pair Corralation between Air Liquide and EMBARK EDUCATION

Assuming the 90 days trading horizon Air Liquide is expected to generate 1.65 times less return on investment than EMBARK EDUCATION. But when comparing it to its historical volatility, Air Liquide SA is 1.33 times less risky than EMBARK EDUCATION. It trades about 0.04 of its potential returns per unit of risk. EMBARK EDUCATION LTD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  22.00  in EMBARK EDUCATION LTD on October 5, 2024 and sell it today you would earn a total of  9.00  from holding EMBARK EDUCATION LTD or generate 40.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Air Liquide SA  vs.  EMBARK EDUCATION LTD

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. In spite of latest fragile performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

EMBARK EDUCATION LTD

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days EMBARK EDUCATION LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EMBARK EDUCATION is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Air Liquide and EMBARK EDUCATION

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

The idea behind Air Liquide SA and EMBARK EDUCATION LTD 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 Commodity Directory module to find actively traded commodities issued by global exchanges.