Correlation Between TR Property and Air Products

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

By analyzing existing cross correlation between TR Property Investment and Air Products Chemicals, you can compare the effects of market volatilities on TR Property and Air Products 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 TR Property with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of TR Property and Air Products.

Diversification Opportunities for TR Property and Air Products

-0.61

Correlation Coefficient

TR Property  Air Products

Excellent diversification

The 3 months correlation between TRY and Air is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding TR Property Investment and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and TR Property 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 TR Property Investment are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of TR Property i.e., TR Property and Air Products go up and down completely randomly.

Pair Corralation between TR Property and Air Products

Assuming the 90 days trading horizon TR Property Investment is expected to under-perform the Air Products. But the stock apears to be less risky and, when comparing its historical volatility, TR Property Investment is 1.49 times less risky than Air Products. The stock trades about -0.07 of its potential returns per unit of risk. The Air Products Chemicals is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  27,369  in Air Products Chemicals on September 3, 2024 and sell it today you would earn a total of  5,860  from holding Air Products Chemicals or generate 21.41% return on investment over 90 days.

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

TR Property Investment  vs.  Air Products Chemicals

TR Property Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TR Property Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TR Property is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Air Products Chemicals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products Chemicals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Air Products unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TR Property and Air Products

The main advantage of trading using opposite TR Property and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TR Property position performs unexpectedly, Air Products 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 Products will offset losses from the drop in Air Products' long position.

The idea behind TR Property Investment and Air Products Chemicals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.