Correlation Between AIR PRODCHEMICALS and TRADEGATE
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and TRADEGATE 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 PRODCHEMICALS and TRADEGATE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and TRADEGATE, you can compare the effects of market volatilities on AIR PRODCHEMICALS and TRADEGATE 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 PRODCHEMICALS with a short position of TRADEGATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and TRADEGATE.
Diversification Opportunities for AIR PRODCHEMICALS and TRADEGATE
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between AIR and TRADEGATE is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and TRADEGATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRADEGATE and AIR PRODCHEMICALS 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 PRODCHEMICALS are associated (or correlated) with TRADEGATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRADEGATE has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and TRADEGATE go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and TRADEGATE
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to under-perform the TRADEGATE. In addition to that, AIR PRODCHEMICALS is 2.91 times more volatile than TRADEGATE. It trades about -1.03 of its total potential returns per unit of risk. TRADEGATE is currently generating about -0.14 per unit of volatility. If you would invest 9,050 in TRADEGATE on October 5, 2024 and sell it today you would lose (50.00) from holding TRADEGATE or give up 0.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AIR PRODCHEMICALS vs. TRADEGATE
Performance |
Timeline |
AIR PRODCHEMICALS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
TRADEGATE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AIR PRODCHEMICALS and TRADEGATE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AIR PRODCHEMICALS and TRADEGATE
The main advantage of trading using opposite AIR PRODCHEMICALS and TRADEGATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, TRADEGATE 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 TRADEGATE will offset losses from the drop in TRADEGATE's long position.The idea behind AIR PRODCHEMICALS and TRADEGATE 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.Check out your portfolio center.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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