Correlation Between LAir Liquide and MYFAIR GOLD

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

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

Diversification Opportunities for LAir Liquide and MYFAIR GOLD

0.33

Correlation Coefficient

LAir Liquide  MYFAIR GOLD

Weak diversification

The 3 months correlation between LAir and MYFAIR is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and MYFAIR GOLD P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYFAIR GOLD P and LAir Liquide 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 LAir Liquide SA are associated (or correlated) with MYFAIR GOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYFAIR GOLD P has no effect on the direction of LAir Liquide i.e., LAir Liquide and MYFAIR GOLD go up and down completely randomly.

Pair Corralation between LAir Liquide and MYFAIR GOLD

Assuming the 90 days trading horizon LAir Liquide SA is expected to under-perform the MYFAIR GOLD. But the stock apears to be less risky and, when comparing its historical volatility, LAir Liquide SA is 3.78 times less risky than MYFAIR GOLD. The stock trades about -0.16 of its potential returns per unit of risk. The MYFAIR GOLD P is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  118.00  in MYFAIR GOLD P on September 24, 2024 and sell it today you would lose (4.00) from holding MYFAIR GOLD P or give up 3.39% of portfolio value over 90 days.

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

LAir Liquide SA  vs.  MYFAIR GOLD P

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.

MYFAIR GOLD P

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with LAir Liquide and MYFAIR GOLD

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

The idea behind LAir Liquide SA and MYFAIR GOLD P 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.