Correlation Between Air Products and Femasys

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

Diversification Opportunities for Air Products and Femasys

0.1

Correlation Coefficient

Air Products  Femasys

Average diversification

The 3 months correlation between Air and Femasys is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Femasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Femasys 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 Femasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Femasys has no effect on the direction of Air Products i.e., Air Products and Femasys go up and down completely randomly.

Pair Corralation between Air Products and Femasys

Considering the 90-day investment horizon Air Products is expected to generate 43.83 times less return on investment than Femasys. But when comparing it to its historical volatility, Air Products and is 2.9 times less risky than Femasys. It trades about 0.01 of its potential returns per unit of risk. Femasys is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  109.00  in Femasys on December 20, 2024 and sell it today you would earn a total of  48.00  from holding Femasys or generate 44.04% return on investment over 90 days.

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

Air Products and  vs.  Femasys

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.

Femasys

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Femasys are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Femasys showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Products and Femasys

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

The idea behind Air Products and and Femasys 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.