Correlation Between Safran SA and Air Liquide

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

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

Diversification Opportunities for Safran SA and Air Liquide

-0.42

Correlation Coefficient

Safran SA  Air Liquide

Very good diversification

The 3 months correlation between Safran and Air is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA 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 Safran SA 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 Safran SA 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 Safran SA i.e., Safran SA and Air Liquide go up and down completely randomly.

Pair Corralation between Safran SA and Air Liquide

Assuming the 90 days trading horizon Safran SA is expected to generate 1.16 times more return on investment than Air Liquide. However, Safran SA is 1.16 times more volatile than Air Liquide SA. It trades about 0.14 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.09 per unit of risk. If you would invest  19,720  in Safran SA on September 2, 2024 and sell it today you would earn a total of  2,330  from holding Safran SA or generate 11.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Safran SA  vs.  Air Liquide SA

Safran SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safran SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Safran SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. Despite 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 Safran SA and Air Liquide

The main advantage of trading using opposite Safran SA and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA 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 Safran SA 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.