Correlation Between Air Products and IMCD NV

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

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

Diversification Opportunities for Air Products and IMCD NV

0.54

Correlation Coefficient

Air Products  IMCD NV

Very weak diversification

The 3 months correlation between Air and IMCD is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and IMCD NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMCD NV and Air Products 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 Air Products and are associated (or correlated) with IMCD NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMCD NV has no effect on the direction of Air Products i.e., Air Products and IMCD NV go up and down completely randomly.

Pair Corralation between Air Products and IMCD NV

Considering the 90-day investment horizon Air Products and is expected to generate 0.65 times more return on investment than IMCD NV. However, Air Products and is 1.54 times less risky than IMCD NV. It trades about 0.13 of its potential returns per unit of risk. IMCD NV is currently generating about 0.05 per unit of risk. If you would invest  21,367  in Air Products and on August 2, 2024 and sell it today you would earn a total of  9,686  from holding Air Products and or generate 45.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	69.68%
Values	Daily Returns

Air Products and  vs.  IMCD NV

Air Products

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Air Products may actually be approaching a critical reversion point that can send shares even higher in December 2024.

IMCD NV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IMCD NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, IMCD NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Products and IMCD NV

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

The idea behind Air Products and and IMCD NV 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.