Correlation Between Advansix and Air Products

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Can any of the company-specific risk be diversified away by investing in both Advansix and Air Products 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 Advansix and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advansix and Air Products And, you can compare the effects of market volatilities on Advansix and Air Products 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 Advansix with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advansix and Air Products.

Diversification Opportunities for Advansix and Air Products

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Advansix and Air Products is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Advansix and Air Products And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products And and Advansix 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 Advansix are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products And has no effect on the direction of Advansix i.e., Advansix and Air Products go up and down completely randomly.

Pair Corralation between Advansix and Air Products

Given the investment horizon of 90 days Advansix is expected to under-perform the Air Products. In addition to that, Advansix is 1.47 times more volatile than Air Products And. It trades about -0.15 of its total potential returns per unit of risk. Air Products And is currently generating about -0.06 per unit of volatility. If you would invest  24,725  in Air Products And on July 1, 2022 and sell it today you would lose (1,228)  from holding Air Products And or give up 4.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Advansix  vs.  Air Products And

 Performance (%) 
       Timeline  
Advansix 
Advansix Performance
0 of 100
Over the last 90 days Advansix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Advansix is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Advansix Price Channel

Air Products And 
Air Products Performance
0 of 100
Over the last 90 days Air Products And has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Air Products is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Air Products Price Channel

Advansix and Air Products Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advansix and Air Products

The main advantage of trading using opposite Advansix and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advansix position performs unexpectedly, Air Products 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 Products will offset losses from the drop in Air Products' long position.
Advansix vs. International Business Machines
The idea behind Advansix and Air Products And 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.
Air Products vs. Amazon Inc
Check out your portfolio center. 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 Piotroski F Score module to get Piotroski F Score based on binary analysis strategy of nine different fundamentals.

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