Correlation Between Air Products and SunOpta

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

Diversification Opportunities for Air Products and SunOpta

0.17

Correlation Coefficient

Air Products  SunOpta

Average diversification

The 3 months correlation between Air and SunOpta is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Air Products i.e., Air Products and SunOpta go up and down completely randomly.

Pair Corralation between Air Products and SunOpta

Considering the 90-day investment horizon Air Products is expected to generate 6.79 times less return on investment than SunOpta. But when comparing it to its historical volatility, Air Products and is 1.78 times less risky than SunOpta. It trades about 0.02 of its potential returns per unit of risk. SunOpta is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  675.00  in SunOpta on September 22, 2024 and sell it today you would earn a total of  98.00  from holding SunOpta or generate 14.52% 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.  SunOpta

Air Products

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 1 (%) 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.

SunOpta

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile forward-looking signals, SunOpta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Products and SunOpta

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

The idea behind Air Products and and SunOpta 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.