Correlation Between State Bank and Air Liquide

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

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

Diversification Opportunities for State Bank and Air Liquide

-0.73

Correlation Coefficient

State Bank  Air Liquide

Pay attention - limited upside

The 3 months correlation between State and Air is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of 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 State Bank 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 State Bank of 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 State Bank i.e., State Bank and Air Liquide go up and down completely randomly.

Pair Corralation between State Bank and Air Liquide

Assuming the 90 days horizon State Bank of is expected to generate 2.16 times more return on investment than Air Liquide. However, State Bank is 2.16 times more volatile than Air Liquide SA. It trades about 0.02 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.14 per unit of risk. If you would invest  8,700  in State Bank of on October 4, 2024 and sell it today you would earn a total of  150.00  from holding State Bank of or generate 1.72% return on investment over 90 days.

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

State Bank of  vs.  Air Liquide SA

State Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, State Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 State Bank and Air Liquide

The main advantage of trading using opposite State Bank and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank 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 State Bank of 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.