Correlation Between Brockhaus Capital and AIR LIQUIDE

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

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

Diversification Opportunities for Brockhaus Capital and AIR LIQUIDE

0.87

Correlation Coefficient

Brockhaus Capital  AIR LIQUIDE

Very poor diversification

The 3 months correlation between Brockhaus and AIR is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management 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 Brockhaus Capital 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 Brockhaus Capital Management 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 Brockhaus Capital i.e., Brockhaus Capital and AIR LIQUIDE go up and down completely randomly.

Pair Corralation between Brockhaus Capital and AIR LIQUIDE

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to under-perform the AIR LIQUIDE. In addition to that, Brockhaus Capital is 2.16 times more volatile than AIR LIQUIDE ADR. It trades about -0.12 of its total potential returns per unit of risk. AIR LIQUIDE ADR is currently generating about -0.1 per unit of volatility. If you would invest  3,300  in AIR LIQUIDE ADR on September 22, 2024 and sell it today you would lose (220.00) from holding AIR LIQUIDE ADR or give up 6.67% of portfolio value over 90 days.

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

Brockhaus Capital Management  vs.  AIR LIQUIDE ADR

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical 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.

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 latest uncertain performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Brockhaus Capital and AIR LIQUIDE

The main advantage of trading using opposite Brockhaus Capital and AIR LIQUIDE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brockhaus Capital 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 Brockhaus Capital Management 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 Commodity Directory module to find actively traded commodities issued by global exchanges.