Correlation Between LAir Liquide and 62954WAC9

Can any of the company-specific risk be diversified away by investing in both LAir Liquide and 62954WAC9 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 62954WAC9 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 NTT 1162 03 APR 26, you can compare the effects of market volatilities on LAir Liquide and 62954WAC9 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 62954WAC9. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and 62954WAC9.

Diversification Opportunities for LAir Liquide and 62954WAC9

-0.76

Correlation Coefficient

LAir Liquide  62954WAC9

Pay attention - limited upside

The 3 months correlation between LAir and 62954WAC9 is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and NTT 1162 03 APR 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTT 1162 03 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 62954WAC9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTT 1162 03 has no effect on the direction of LAir Liquide i.e., LAir Liquide and 62954WAC9 go up and down completely randomly.

Pair Corralation between LAir Liquide and 62954WAC9

Assuming the 90 days horizon LAir Liquide SA is expected to generate 2.13 times more return on investment than 62954WAC9. However, LAir Liquide is 2.13 times more volatile than NTT 1162 03 APR 26. It trades about 0.04 of its potential returns per unit of risk. NTT 1162 03 APR 26 is currently generating about 0.02 per unit of risk. If you would invest  13,716  in LAir Liquide SA on October 25, 2024 and sell it today you would earn a total of  3,125  from holding LAir Liquide SA or generate 22.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	75.86%
Values	Daily Returns

LAir Liquide SA  vs.  NTT 1162 03 APR 26

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 latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NTT 1162 03

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NTT 1162 03 APR 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 62954WAC9 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LAir Liquide and 62954WAC9

The main advantage of trading using opposite LAir Liquide and 62954WAC9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide position performs unexpectedly, 62954WAC9 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 62954WAC9 will offset losses from the drop in 62954WAC9's long position.

The idea behind LAir Liquide SA and NTT 1162 03 APR 26 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.