Correlation Between FMC and Air Liquide

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

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

Diversification Opportunities for FMC and Air Liquide

0.79

Correlation Coefficient

FMC  Air Liquide

Poor diversification

The 3 months correlation between FMC and Air is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. 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 FMC 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 FMC Corporation 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 FMC i.e., FMC and Air Liquide go up and down completely randomly.

Pair Corralation between FMC and Air Liquide

Considering the 90-day investment horizon FMC Corporation is expected to under-perform the Air Liquide. In addition to that, FMC is 2.29 times more volatile than Air Liquide SA. It trades about -0.06 of its total potential returns per unit of risk. Air Liquide SA is currently generating about 0.05 per unit of volatility. If you would invest  12,478  in Air Liquide SA on October 4, 2024 and sell it today you would earn a total of  3,022  from holding Air Liquide SA or generate 24.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.2%
Values	Daily Returns

FMC Corp.  vs.  Air Liquide SA

FMC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FMC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 fragile performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with FMC and Air Liquide

The main advantage of trading using opposite FMC and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FMC 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 FMC Corporation 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.