Correlation Between CHINA SOUTHN and LAir Liquide

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

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

Diversification Opportunities for CHINA SOUTHN and LAir Liquide

0.5

Correlation Coefficient

CHINA SOUTHN  LAir Liquide

Very weak diversification

The 3 months correlation between CHINA and LAir is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA and CHINA SOUTHN 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 CHINA SOUTHN AIR H are associated (or correlated) with LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and LAir Liquide go up and down completely randomly.

Pair Corralation between CHINA SOUTHN and LAir Liquide

Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to generate 2.59 times more return on investment than LAir Liquide. However, CHINA SOUTHN is 2.59 times more volatile than LAir Liquide SA. It trades about 0.05 of its potential returns per unit of risk. LAir Liquide SA is currently generating about 0.0 per unit of risk. If you would invest  37.00  in CHINA SOUTHN AIR H on April 20, 2025 and sell it today you would earn a total of  2.00  from holding CHINA SOUTHN AIR H or generate 5.41% return on investment over 90 days.

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

CHINA SOUTHN AIR H   vs.  LAir Liquide SA

CHINA SOUTHN AIR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA SOUTHN AIR H are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CHINA SOUTHN may actually be approaching a critical reversion point that can send shares even higher in August 2025.

LAir Liquide SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days LAir Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LAir Liquide is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CHINA SOUTHN and LAir Liquide

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

The idea behind CHINA SOUTHN AIR H and LAir Liquide 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.