Correlation Between AIR PRODCHEMICALS and CN YANGTPWR

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

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

Diversification Opportunities for AIR PRODCHEMICALS and CN YANGTPWR

-0.41

Correlation Coefficient

AIR PRODCHEMICALS  CN YANGTPWR

Very good diversification

The 3 months correlation between AIR and CYZB is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and CN YANGTPWR GDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN YANGTPWR GDR and AIR PRODCHEMICALS 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 PRODCHEMICALS are associated (or correlated) with CN YANGTPWR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN YANGTPWR GDR has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and CN YANGTPWR go up and down completely randomly.

Pair Corralation between AIR PRODCHEMICALS and CN YANGTPWR

Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 2.84 times less return on investment than CN YANGTPWR. But when comparing it to its historical volatility, AIR PRODCHEMICALS is 2.52 times less risky than CN YANGTPWR. It trades about 0.08 of its potential returns per unit of risk. CN YANGTPWR GDR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,460  in CN YANGTPWR GDR on September 26, 2024 and sell it today you would earn a total of  640.00  from holding CN YANGTPWR GDR or generate 18.5% return on investment over 90 days.

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

AIR PRODCHEMICALS  vs.  CN YANGTPWR GDR

AIR PRODCHEMICALS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AIR PRODCHEMICALS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AIR PRODCHEMICALS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CN YANGTPWR GDR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CN YANGTPWR GDR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CN YANGTPWR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AIR PRODCHEMICALS and CN YANGTPWR

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

The idea behind AIR PRODCHEMICALS and CN YANGTPWR GDR 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.