Correlation Between Atlas Corp and Air Liquide

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

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

Diversification Opportunities for Atlas Corp and Air Liquide

0.52

Correlation Coefficient

Atlas Corp  Air Liquide

Very weak diversification

The 3 months correlation between Atlas and Air is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Corp 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 Atlas Corp 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 Atlas Corp 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 Atlas Corp i.e., Atlas Corp and Air Liquide go up and down completely randomly.

Pair Corralation between Atlas Corp and Air Liquide

Assuming the 90 days horizon Atlas Corp is expected to under-perform the Air Liquide. But the stock apears to be less risky and, when comparing its historical volatility, Atlas Corp is 1.79 times less risky than Air Liquide. The stock trades about -0.17 of its potential returns per unit of risk. The Air Liquide SA is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4,078  in Air Liquide SA on February 9, 2024 and sell it today you would lose (76.00) from holding Air Liquide SA or give up 1.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Atlas Corp  vs.  Air Liquide SA

Atlas Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Atlas Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Air Liquide SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Liquide SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Air Liquide may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Atlas Corp and Air Liquide

The main advantage of trading using opposite Atlas Corp and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Corp 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 Atlas Corp 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.