Correlation Between Gladstone Investment and AIR LIQUIDE

Can any of the company-specific risk be diversified away by investing in both Gladstone Investment 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 Gladstone Investment and AIR LIQUIDE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gladstone Investment and AIR LIQUIDE ADR, you can compare the effects of market volatilities on Gladstone Investment 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 Gladstone Investment with a short position of AIR LIQUIDE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and AIR LIQUIDE.

Diversification Opportunities for Gladstone Investment and AIR LIQUIDE

-0.4

Correlation Coefficient

Gladstone Investment  AIR LIQUIDE

Very good diversification

The 3 months correlation between Gladstone and AIR is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and AIR LIQUIDE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR LIQUIDE ADR and Gladstone Investment 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 Gladstone Investment 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 ADR has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and AIR LIQUIDE go up and down completely randomly.

Pair Corralation between Gladstone Investment and AIR LIQUIDE

Assuming the 90 days horizon Gladstone Investment is expected to generate 0.9 times more return on investment than AIR LIQUIDE. However, Gladstone Investment is 1.11 times less risky than AIR LIQUIDE. It trades about 0.06 of its potential returns per unit of risk. AIR LIQUIDE ADR is currently generating about 0.03 per unit of risk. If you would invest  912.00  in Gladstone Investment on September 30, 2024 and sell it today you would earn a total of  350.00  from holding Gladstone Investment or generate 38.38% return on investment over 90 days.

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

Gladstone Investment  vs.  AIR LIQUIDE ADR

Gladstone Investment

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AIR LIQUIDE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIR LIQUIDE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gladstone Investment and AIR LIQUIDE

The main advantage of trading using opposite Gladstone Investment and AIR LIQUIDE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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 Gladstone Investment and AIR LIQUIDE ADR 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.