Correlation Between International Game and Air Liquide

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

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

Diversification Opportunities for International Game and Air Liquide

0.34

Correlation Coefficient

International Game  Air Liquide

Weak diversification

The 3 months correlation between International and Air is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology 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 International Game 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 International Game Technology 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 International Game i.e., International Game and Air Liquide go up and down completely randomly.

Pair Corralation between International Game and Air Liquide

Assuming the 90 days horizon International Game Technology is expected to under-perform the Air Liquide. In addition to that, International Game is 1.8 times more volatile than Air Liquide SA. It trades about -0.04 of its total potential returns per unit of risk. Air Liquide SA is currently generating about 0.01 per unit of volatility. If you would invest  15,700  in Air Liquide SA on September 13, 2024 and sell it today you would earn a total of  346.00  from holding Air Liquide SA or generate 2.2% return on investment over 90 days.

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

International Game Technology  vs.  Air Liquide SA

International Game

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, International Game is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Air Liquide SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Air Liquide is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with International Game and Air Liquide

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

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.