Correlation Between Air Products and Software Circle

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

By analyzing existing cross correlation between Air Products Chemicals and Software Circle plc, you can compare the effects of market volatilities on Air Products and Software Circle 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 Products with a short position of Software Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Software Circle.

Diversification Opportunities for Air Products and Software Circle

0.31

Correlation Coefficient

Air Products  Software Circle

Weak diversification

The 3 months correlation between Air and Software is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Software Circle plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Circle plc and Air Products 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 Products Chemicals are associated (or correlated) with Software Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Circle plc has no effect on the direction of Air Products i.e., Air Products and Software Circle go up and down completely randomly.

Pair Corralation between Air Products and Software Circle

Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 0.66 times more return on investment than Software Circle. However, Air Products Chemicals is 1.52 times less risky than Software Circle. It trades about 0.14 of its potential returns per unit of risk. Software Circle plc is currently generating about 0.04 per unit of risk. If you would invest  26,384  in Air Products Chemicals on April 23, 2025 and sell it today you would earn a total of  3,208  from holding Air Products Chemicals or generate 12.16% return on investment over 90 days.

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

Air Products Chemicals  vs.  Software Circle plc

Air Products Chemicals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products Chemicals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Air Products may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Software Circle plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Software Circle plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Software Circle is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Air Products and Software Circle

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

The idea behind Air Products Chemicals and Software Circle plc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.