Correlation Between Liaoning Port and AIR PRODCHEMICALS

Can any of the company-specific risk be diversified away by investing in both Liaoning Port and AIR PRODCHEMICALS 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 Liaoning Port and AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Liaoning Port CoLtd and AIR PRODCHEMICALS, you can compare the effects of market volatilities on Liaoning Port and AIR PRODCHEMICALS 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 Liaoning Port with a short position of AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liaoning Port and AIR PRODCHEMICALS.

Diversification Opportunities for Liaoning Port and AIR PRODCHEMICALS

0.44

Correlation Coefficient

Liaoning Port  AIR PRODCHEMICALS

Very weak diversification

The 3 months correlation between Liaoning and AIR is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Liaoning Port CoLtd and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS and Liaoning Port 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 Liaoning Port CoLtd are associated (or correlated) with AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of Liaoning Port i.e., Liaoning Port and AIR PRODCHEMICALS go up and down completely randomly.

Pair Corralation between Liaoning Port and AIR PRODCHEMICALS

Assuming the 90 days horizon Liaoning Port CoLtd is expected to under-perform the AIR PRODCHEMICALS. But the stock apears to be less risky and, when comparing its historical volatility, Liaoning Port CoLtd is 1.06 times less risky than AIR PRODCHEMICALS. The stock trades about -0.1 of its potential returns per unit of risk. The AIR PRODCHEMICALS is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  27,870  in AIR PRODCHEMICALS on December 28, 2024 and sell it today you would lose (490.00) from holding AIR PRODCHEMICALS or give up 1.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Liaoning Port CoLtd  vs.  AIR PRODCHEMICALS

Liaoning Port CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liaoning Port CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AIR PRODCHEMICALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days AIR PRODCHEMICALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AIR PRODCHEMICALS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Liaoning Port and AIR PRODCHEMICALS

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

The idea behind Liaoning Port CoLtd and AIR PRODCHEMICALS 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.

Check out your portfolio center.

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 Correlations module to find global opportunities by holding instruments from different markets.