Correlation Between VIENNA INSURANCE and LAir Liquide

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

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

Diversification Opportunities for VIENNA INSURANCE and LAir Liquide

0.55

Correlation Coefficient

VIENNA INSURANCE  LAir Liquide

Very weak diversification

The 3 months correlation between VIENNA and LAir is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding VIENNA INSURANCE GR 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 VIENNA INSURANCE 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 VIENNA INSURANCE GR 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 VIENNA INSURANCE i.e., VIENNA INSURANCE and LAir Liquide go up and down completely randomly.

Pair Corralation between VIENNA INSURANCE and LAir Liquide

Assuming the 90 days trading horizon VIENNA INSURANCE GR is expected to generate 0.85 times more return on investment than LAir Liquide. However, VIENNA INSURANCE GR is 1.17 times less risky than LAir Liquide. It trades about -0.02 of its potential returns per unit of risk. LAir Liquide SA is currently generating about -0.1 per unit of risk. If you would invest  3,025  in VIENNA INSURANCE GR on September 19, 2024 and sell it today you would lose (45.00) from holding VIENNA INSURANCE GR or give up 1.49% of portfolio value over 90 days.

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

VIENNA INSURANCE GR  vs.  LAir Liquide SA

VIENNA INSURANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIENNA INSURANCE GR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VIENNA INSURANCE 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 latest uncertain performance, the Stock's basic 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 VIENNA INSURANCE and LAir Liquide

The main advantage of trading using opposite VIENNA INSURANCE and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIENNA INSURANCE 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 VIENNA INSURANCE GR 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.