Correlation Between T-MOBILE and LAir Liquide

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

By analyzing existing cross correlation between T MOBILE INCDL 00001 and LAir Liquide SA, you can compare the effects of market volatilities on T-MOBILE and LAir 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 T-MOBILE with a short position of LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of T-MOBILE and LAir Liquide.

Diversification Opportunities for T-MOBILE and LAir Liquide

-0.51

Correlation Coefficient

T-MOBILE  LAir Liquide

Excellent diversification

The 3 months correlation between T-MOBILE and LAir is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE INCDL 00001 and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA and T-MOBILE 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 T MOBILE INCDL 00001 are associated (or correlated) with LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of T-MOBILE i.e., T-MOBILE and LAir Liquide go up and down completely randomly.

Pair Corralation between T-MOBILE and LAir Liquide

Assuming the 90 days trading horizon T MOBILE INCDL 00001 is expected to generate 1.22 times more return on investment than LAir Liquide. However, T-MOBILE is 1.22 times more volatile than LAir Liquide SA. It trades about 0.07 of its potential returns per unit of risk. LAir Liquide SA is currently generating about 0.05 per unit of risk. If you would invest  13,722  in T MOBILE INCDL 00001 on October 22, 2024 and sell it today you would earn a total of  7,478  from holding T MOBILE INCDL 00001 or generate 54.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.41%
Values	Daily Returns

T MOBILE INCDL 00001  vs.  LAir Liquide SA

T MOBILE INCDL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE INCDL 00001 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, T-MOBILE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

LAir Liquide SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAir Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LAir 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 T-MOBILE and LAir Liquide

The main advantage of trading using opposite T-MOBILE and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T-MOBILE position performs unexpectedly, LAir 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 LAir Liquide will offset losses from the drop in LAir Liquide's long position.

The idea behind T MOBILE INCDL 00001 and LAir 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.