Correlation Between LAir Liquide and Denison Mines

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

Diversification Opportunities for LAir Liquide and Denison Mines

0.01

Correlation Coefficient

LAir Liquide  Denison Mines

Significant diversification

The 3 months correlation between LAir and Denison is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp 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 Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of LAir Liquide i.e., LAir Liquide and Denison Mines go up and down completely randomly.

Pair Corralation between LAir Liquide and Denison Mines

Assuming the 90 days horizon LAir Liquide SA is expected to generate 0.38 times more return on investment than Denison Mines. However, LAir Liquide SA is 2.65 times less risky than Denison Mines. It trades about -0.06 of its potential returns per unit of risk. Denison Mines Corp is currently generating about -0.12 per unit of risk. If you would invest  16,714  in LAir Liquide SA on October 11, 2024 and sell it today you would lose (357.00) from holding LAir Liquide SA or give up 2.14% of portfolio value over 90 days.

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

LAir Liquide SA  vs.  Denison Mines Corp

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. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Denison Mines Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Denison Mines Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Denison Mines may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with LAir Liquide and Denison Mines

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

The idea behind LAir Liquide SA and Denison Mines Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.