Correlation Between Chart Industries and PRAXAIR

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

By analyzing existing cross correlation between Chart Industries and PRAXAIR INC 32, you can compare the effects of market volatilities on Chart Industries and PRAXAIR 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 Chart Industries with a short position of PRAXAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chart Industries and PRAXAIR.

Diversification Opportunities for Chart Industries and PRAXAIR

-0.42

Correlation Coefficient

Chart Industries  PRAXAIR

Very good diversification

The 3 months correlation between Chart and PRAXAIR is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and PRAXAIR INC 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRAXAIR INC 32 and Chart Industries 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 Chart Industries are associated (or correlated) with PRAXAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRAXAIR INC 32 has no effect on the direction of Chart Industries i.e., Chart Industries and PRAXAIR go up and down completely randomly.

Pair Corralation between Chart Industries and PRAXAIR

Assuming the 90 days trading horizon Chart Industries is expected to generate 18.28 times more return on investment than PRAXAIR. However, Chart Industries is 18.28 times more volatile than PRAXAIR INC 32. It trades about 0.32 of its potential returns per unit of risk. PRAXAIR INC 32 is currently generating about -0.02 per unit of risk. If you would invest  4,953  in Chart Industries on October 25, 2024 and sell it today you would earn a total of  2,910  from holding Chart Industries or generate 58.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Chart Industries  vs.  PRAXAIR INC 32

Chart Industries

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Chart Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

PRAXAIR INC 32

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PRAXAIR INC 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PRAXAIR is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chart Industries and PRAXAIR

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

The idea behind Chart Industries and PRAXAIR INC 32 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.