Correlation Between Air Liquide and Linde PLC
Can any of the company-specific risk be diversified away by investing in both Air Liquide and Linde PLC 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 Linde PLC 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 Linde PLC, you can compare the effects of market volatilities on Air Liquide and Linde PLC 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 Linde PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Liquide and Linde PLC.
Diversification Opportunities for Air Liquide and Linde PLC
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Linde is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Air Liquide SA and Linde PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde PLC 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 Linde PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linde PLC has no effect on the direction of Air Liquide i.e., Air Liquide and Linde PLC go up and down completely randomly.
Pair Corralation between Air Liquide and Linde PLC
Assuming the 90 days trading horizon Air Liquide SA is expected to generate 1.08 times more return on investment than Linde PLC. However, Air Liquide is 1.08 times more volatile than Linde PLC. It trades about -0.23 of its potential returns per unit of risk. Linde PLC is currently generating about -0.45 per unit of risk. If you would invest 16,030 in Air Liquide SA on September 25, 2024 and sell it today you would lose (608.00) from holding Air Liquide SA or give up 3.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Liquide SA vs. Linde PLC
Performance |
| Timeline |
| Air Liquide SA |
| Linde PLC |
Air Liquide and Linde PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Liquide and Linde PLC
The main advantage of trading using opposite Air Liquide and Linde PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Liquide position performs unexpectedly, Linde PLC 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 Linde PLC will offset losses from the drop in Linde PLC's long position.| Air Liquide vs. Linde plc | Air Liquide vs. Linde PLC | Air Liquide vs. The Sherwin Williams | Air Liquide vs. Ecolab Inc |
| Linde PLC vs. Linde plc | Linde PLC vs. Air Liquide SA | Linde PLC vs. The Sherwin Williams | Linde PLC vs. Ecolab 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 the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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