Correlation Between Air Products and AGC

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

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

Diversification Opportunities for Air Products and AGC

-0.34

Correlation Coefficient

Air Products  AGC

Very good diversification

The 3 months correlation between Air and AGC is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and AGC Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGC Inc ADR and Air Products 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 Products and are associated (or correlated) with AGC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGC Inc ADR has no effect on the direction of Air Products i.e., Air Products and AGC go up and down completely randomly.

Pair Corralation between Air Products and AGC

Considering the 90-day investment horizon Air Products is expected to generate 14.98 times less return on investment than AGC. But when comparing it to its historical volatility, Air Products and is 2.22 times less risky than AGC. It trades about 0.01 of its potential returns per unit of risk. AGC Inc ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  555.00  in AGC Inc ADR on December 26, 2024 and sell it today you would earn a total of  36.00  from holding AGC Inc ADR or generate 6.49% return on investment over 90 days.

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

Air Products and  vs.  AGC Inc ADR

Air Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Products and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Air Products is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

AGC Inc ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGC Inc ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, AGC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Air Products and AGC

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

The idea behind Air Products and and AGC Inc ADR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.