Correlation Between Moulinvest and Air Liquide

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

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

Diversification Opportunities for Moulinvest and Air Liquide

0.75

Correlation Coefficient

Moulinvest  Air Liquide

Poor diversification

The 3 months correlation between Moulinvest and Air is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Moulinvest and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA and Moulinvest 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 Moulinvest are associated (or correlated) with Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Moulinvest i.e., Moulinvest and Air Liquide go up and down completely randomly.

Pair Corralation between Moulinvest and Air Liquide

Assuming the 90 days trading horizon Moulinvest is expected to under-perform the Air Liquide. In addition to that, Moulinvest is 1.96 times more volatile than Air Liquide SA. It trades about -0.08 of its total potential returns per unit of risk. Air Liquide SA is currently generating about -0.09 per unit of volatility. If you would invest  16,972  in Air Liquide SA on September 12, 2024 and sell it today you would lose (968.00) from holding Air Liquide SA or give up 5.7% of portfolio value over 90 days.

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

Moulinvest  vs.  Air Liquide SA

Moulinvest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moulinvest has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

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. Despite somewhat strong basic indicators, Air Liquide is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moulinvest and Air Liquide

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

The idea behind Moulinvest and Air Liquide SA 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 Stocks Directory module to find actively traded stocks across global markets.