Correlation Between Israel and LAir Liquide

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

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

Diversification Opportunities for Israel and LAir Liquide

0.0

Correlation Coefficient

Israel  LAir Liquide

Pay attention - limited upside

The 3 months correlation between Israel and LAir is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Israel and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA and Israel 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 Israel are associated (or correlated) with LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of Israel i.e., Israel and LAir Liquide go up and down completely randomly.

Pair Corralation between Israel and LAir Liquide

If you would invest  21,900  in Israel on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Israel or generate 0.0% return on investment over 90 days.

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

Israel  vs.  LAir Liquide SA

Israel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Israel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Israel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

LAir Liquide SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAir Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

Pair Trading with Israel and LAir Liquide

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

The idea behind Israel and LAir 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.