Correlation Between Albemarle and Air Liquide

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

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

Diversification Opportunities for Albemarle and Air Liquide

-0.73

Correlation Coefficient

Albemarle  Air Liquide

Pay attention - limited upside

The 3 months correlation between Albemarle and Air is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle 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 Albemarle 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 Albemarle 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 Albemarle i.e., Albemarle and Air Liquide go up and down completely randomly.

Pair Corralation between Albemarle and Air Liquide

Assuming the 90 days horizon Albemarle is expected to under-perform the Air Liquide. In addition to that, Albemarle is 3.23 times more volatile than Air Liquide SA. It trades about -0.02 of its total potential returns per unit of risk. Air Liquide SA is currently generating about 0.07 per unit of volatility. If you would invest  16,932  in Air Liquide SA on December 10, 2024 and sell it today you would earn a total of  1,414  from holding Air Liquide SA or generate 8.35% return on investment over 90 days.

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

Albemarle  vs.  Air Liquide SA

Albemarle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Albemarle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Air Liquide SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Liquide SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Air Liquide may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Albemarle and Air Liquide

The main advantage of trading using opposite Albemarle and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albemarle 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 Albemarle 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 Global Correlations module to find global opportunities by holding instruments from different markets.