Correlation Between Take Two and Air Liquide

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

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

Diversification Opportunities for Take Two and Air Liquide

-0.89

Correlation Coefficient

Take Two  Air Liquide

Pay attention - limited upside

The 3 months correlation between Take and Air is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software 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 Take Two 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 Take Two Interactive Software 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 Take Two i.e., Take Two and Air Liquide go up and down completely randomly.

Pair Corralation between Take Two and Air Liquide

Assuming the 90 days horizon Take Two is expected to generate 1.19 times less return on investment than Air Liquide. In addition to that, Take Two is 1.4 times more volatile than Air Liquide SA. It trades about 0.18 of its total potential returns per unit of risk. Air Liquide SA is currently generating about 0.31 per unit of volatility. If you would invest  15,422  in Air Liquide SA on October 23, 2024 and sell it today you would earn a total of  776.00  from holding Air Liquide SA or generate 5.03% return on investment over 90 days.

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

Take Two Interactive Software  vs.  Air Liquide SA

Take Two Interactive

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Take Two reported solid returns over the last few months and may actually be approaching a breakup point.

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 comparatively stable essential indicators, Air Liquide is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Take Two and Air Liquide

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