Correlation Between Air Liquide and Oeneo SA

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

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

Diversification Opportunities for Air Liquide and Oeneo SA

-0.76

Correlation Coefficient

Air Liquide  Oeneo SA

Pay attention - limited upside

The 3 months correlation between Air and Oeneo is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and Oeneo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oeneo SA and Air 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 Air Liquide SA are associated (or correlated) with Oeneo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oeneo SA has no effect on the direction of Air Liquide i.e., Air Liquide and Oeneo SA go up and down completely randomly.

Pair Corralation between Air Liquide and Oeneo SA

Assuming the 90 days horizon Air Liquide SA is expected to under-perform the Oeneo SA. But the stock apears to be less risky and, when comparing its historical volatility, Air Liquide SA is 1.53 times less risky than Oeneo SA. The stock trades about -0.21 of its potential returns per unit of risk. The Oeneo SA is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,060  in Oeneo SA on February 1, 2024 and sell it today you would lose (35.00) from holding Oeneo SA or give up 3.3% of portfolio value over 90 days.

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

Air Liquide SA  vs.  Oeneo SA

Air Liquide SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air Liquide SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Air Liquide may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Oeneo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oeneo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Air Liquide and Oeneo SA

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

The idea behind Air Liquide SA and Oeneo SA 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.