Correlation Between Air Products and 655844CK2

Can any of the company-specific risk be diversified away by investing in both Air Products and 655844CK2 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 655844CK2 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 NSC 23 15 MAY 31, you can compare the effects of market volatilities on Air Products and 655844CK2 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 655844CK2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and 655844CK2.

Diversification Opportunities for Air Products and 655844CK2

0.51

Correlation Coefficient

Air Products  655844CK2

Very weak diversification

The 3 months correlation between Air and 655844CK2 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and NSC 23 15 MAY 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSC 23 15 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 655844CK2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSC 23 15 has no effect on the direction of Air Products i.e., Air Products and 655844CK2 go up and down completely randomly.

Pair Corralation between Air Products and 655844CK2

Considering the 90-day investment horizon Air Products and is expected to generate 2.47 times more return on investment than 655844CK2. However, Air Products is 2.47 times more volatile than NSC 23 15 MAY 31. It trades about 0.01 of its potential returns per unit of risk. NSC 23 15 MAY 31 is currently generating about -0.01 per unit of risk. If you would invest  29,336  in Air Products and on October 12, 2024 and sell it today you would lose (28.00) from holding Air Products and or give up 0.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	78.38%
Values	Daily Returns

Air Products and  vs.  NSC 23 15 MAY 31

Air Products

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

NSC 23 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NSC 23 15 MAY 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 655844CK2 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Air Products and 655844CK2

The main advantage of trading using opposite Air Products and 655844CK2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, 655844CK2 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 655844CK2 will offset losses from the drop in 655844CK2's long position.

The idea behind Air Products and and NSC 23 15 MAY 31 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.