Correlation Between Tradegate and AIR LIQUIDE

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

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

Diversification Opportunities for Tradegate and AIR LIQUIDE

-0.44

Correlation Coefficient

Tradegate  AIR LIQUIDE

Very good diversification

The 3 months correlation between Tradegate and AIR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tradegate AG Wertpapierhandels 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 Tradegate 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 Tradegate AG Wertpapierhandelsbank 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 Tradegate i.e., Tradegate and AIR LIQUIDE go up and down completely randomly.

Pair Corralation between Tradegate and AIR LIQUIDE

Assuming the 90 days horizon Tradegate AG Wertpapierhandelsbank is expected to under-perform the AIR LIQUIDE. But the stock apears to be less risky and, when comparing its historical volatility, Tradegate AG Wertpapierhandelsbank is 5.05 times less risky than AIR LIQUIDE. The stock trades about -0.12 of its potential returns per unit of risk. The AIR LIQUIDE ADR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,040  in AIR LIQUIDE ADR on December 27, 2024 and sell it today you would earn a total of  440.00  from holding AIR LIQUIDE ADR or generate 14.47% return on investment over 90 days.

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

Tradegate AG Wertpapierhandels  vs.  AIR LIQUIDE ADR

Tradegate AG Wertpap

Risk-Adjusted Performance

Very Weak

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

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 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, AIR LIQUIDE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tradegate and AIR LIQUIDE

The main advantage of trading using opposite Tradegate and AIR LIQUIDE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradegate 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 Tradegate AG Wertpapierhandelsbank 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.