Correlation Between Avoca LLC and Air Liquide

Can any of the company-specific risk be diversified away by investing in both Avoca LLC and Air Liquide 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 Avoca LLC and Air Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avoca LLC and Air Liquide SA, you can compare the effects of market volatilities on Avoca LLC and Air Liquide 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 Avoca LLC with a short position of Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avoca LLC and Air Liquide.

Diversification Opportunities for Avoca LLC and Air Liquide

0.14

Correlation Coefficient

Avoca LLC  Air Liquide

Average diversification

The 3 months correlation between Avoca and Air is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Avoca LLC and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA and Avoca LLC 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 Avoca LLC are associated (or correlated) with Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Avoca LLC i.e., Avoca LLC and Air Liquide go up and down completely randomly.

Pair Corralation between Avoca LLC and Air Liquide

Given the investment horizon of 90 days Avoca LLC is expected to generate 5.56 times more return on investment than Air Liquide. However, Avoca LLC is 5.56 times more volatile than Air Liquide SA. It trades about 0.15 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.31 per unit of risk. If you would invest  108,000  in Avoca LLC on September 1, 2024 and sell it today you would earn a total of  19,500  from holding Avoca LLC or generate 18.06% return on investment over 90 days.

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

Avoca LLC  vs.  Air Liquide SA

Avoca LLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Avoca LLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Avoca LLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Air Liquide SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Avoca LLC and Air Liquide

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

The idea behind Avoca LLC and Air Liquide SA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.