Correlation Between Air Products and BLACW Old

Can any of the company-specific risk be diversified away by investing in both Air Products and BLACW Old 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 BLACW Old 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 BLACW Old, you can compare the effects of market volatilities on Air Products and BLACW Old 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 BLACW Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and BLACW Old.

Diversification Opportunities for Air Products and BLACW Old

0.07

Correlation Coefficient

Air Products  BLACW Old

Significant diversification

The 3 months correlation between Air and BLACW is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and BLACW Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLACW Old 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 BLACW Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLACW Old has no effect on the direction of Air Products i.e., Air Products and BLACW Old go up and down completely randomly.

Pair Corralation between Air Products and BLACW Old

Considering the 90-day investment horizon Air Products is expected to generate 127.94 times less return on investment than BLACW Old. But when comparing it to its historical volatility, Air Products and is 20.21 times less risky than BLACW Old. It trades about 0.03 of its potential returns per unit of risk. BLACW Old is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4.00  in BLACW Old on December 28, 2024 and sell it today you would earn a total of  1.15  from holding BLACW Old or generate 28.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	26.23%
Values	Daily Returns

Air Products and  vs.  BLACW Old

Air Products

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

BLACW Old

Risk-Adjusted Performance

Good

Over the last 90 days BLACW Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent fundamental indicators, BLACW Old showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Products and BLACW Old

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

The idea behind Air Products and and BLACW Old 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.