Correlation Between Air Products and 124857AN3

Can any of the company-specific risk be diversified away by investing in both Air Products and 124857AN3 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 124857AN3 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 CBS P NEW, you can compare the effects of market volatilities on Air Products and 124857AN3 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 124857AN3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and 124857AN3.

Diversification Opportunities for Air Products and 124857AN3

0.24

Correlation Coefficient

Air Products  124857AN3

Modest diversification

The 3 months correlation between Air and 124857AN3 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and CBS P NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBS P NEW 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 124857AN3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBS P NEW has no effect on the direction of Air Products i.e., Air Products and 124857AN3 go up and down completely randomly.

Pair Corralation between Air Products and 124857AN3

Considering the 90-day investment horizon Air Products and is expected to generate 0.85 times more return on investment than 124857AN3. However, Air Products and is 1.18 times less risky than 124857AN3. It trades about 0.13 of its potential returns per unit of risk. CBS P NEW is currently generating about -0.07 per unit of risk. If you would invest  27,836  in Air Products and on September 12, 2024 and sell it today you would earn a total of  3,685  from holding Air Products and or generate 13.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.13%
Values	Daily Returns

Air Products and  vs.  CBS P NEW

Air Products

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Air Products exhibited solid returns over the last few months and may actually be approaching a breakup point.

CBS P NEW

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days CBS P NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CBS P NEW investors.

Pair Trading with Air Products and 124857AN3

The main advantage of trading using opposite Air Products and 124857AN3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, 124857AN3 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 124857AN3 will offset losses from the drop in 124857AN3's long position.

The idea behind Air Products and and CBS P NEW 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.