Correlation Between SEALED AIR and AIR LIQUIDE

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

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

Diversification Opportunities for SEALED AIR and AIR LIQUIDE

-0.77

Correlation Coefficient

SEALED AIR  AIR LIQUIDE

Pay attention - limited upside

The 3 months correlation between SEALED and AIR is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and AIR LIQUIDE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR LIQUIDE ADR and SEALED AIR 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 SEALED AIR 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 ADR has no effect on the direction of SEALED AIR i.e., SEALED AIR and AIR LIQUIDE go up and down completely randomly.

Pair Corralation between SEALED AIR and AIR LIQUIDE

Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the AIR LIQUIDE. In addition to that, SEALED AIR is 1.09 times more volatile than AIR LIQUIDE ADR. It trades about -0.16 of its total potential returns per unit of risk. AIR LIQUIDE ADR is currently generating about 0.16 per unit of volatility. If you would invest  3,040  in AIR LIQUIDE ADR on December 26, 2024 and sell it today you would earn a total of  480.00  from holding AIR LIQUIDE ADR or generate 15.79% return on investment over 90 days.

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

SEALED AIR   vs.  AIR LIQUIDE ADR

SEALED AIR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEALED AIR 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AIR LIQUIDE ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIR LIQUIDE ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, AIR LIQUIDE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEALED AIR and AIR LIQUIDE

The main advantage of trading using opposite SEALED AIR and AIR LIQUIDE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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 SEALED AIR and AIR LIQUIDE ADR 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.