Correlation Between Ashland Global and Air Products

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

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

Diversification Opportunities for Ashland Global and Air Products

-0.53

Correlation Coefficient

Ashland Global  Air Products

Excellent diversification

The 3 months correlation between Ashland and Air is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ashland Global Holdings and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Ashland Global 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 Ashland Global Holdings 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 has no effect on the direction of Ashland Global i.e., Ashland Global and Air Products go up and down completely randomly.

Pair Corralation between Ashland Global and Air Products

Considering the 90-day investment horizon Ashland Global Holdings is expected to generate 1.15 times more return on investment than Air Products. However, Ashland Global is 1.15 times more volatile than Air Products and. It trades about -0.05 of its potential returns per unit of risk. Air Products and is currently generating about -0.26 per unit of risk. If you would invest  9,539  in Ashland Global Holdings on January 18, 2024 and sell it today you would lose (150.00) from holding Ashland Global Holdings or give up 1.57% of portfolio value over 90 days.

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

Ashland Global Holdings  vs.  Air Products and

Ashland Global Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ashland Global Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Ashland Global demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Air Products

Risk-Adjusted Performance

0 of 100

Very Weak

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 latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Ashland Global and Air Products

The main advantage of trading using opposite Ashland Global and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashland Global 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.

The idea behind Ashland Global Holdings 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.