Correlation Between G III and Linde PLC
Can any of the company-specific risk be diversified away by investing in both G III 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 G III and Linde PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III Apparel Group and Linde PLC, you can compare the effects of market volatilities on G III 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 G III with a short position of Linde PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and Linde PLC.
Diversification Opportunities for G III and Linde PLC
Modest diversification
The 3 months correlation between GI4 and Linde is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and Linde PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde PLC and G III 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 G III Apparel Group 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 G III i.e., G III and Linde PLC go up and down completely randomly.
Pair Corralation between G III and Linde PLC
Assuming the 90 days horizon G III Apparel Group is expected to generate 3.02 times more return on investment than Linde PLC. However, G III is 3.02 times more volatile than Linde PLC. It trades about 0.06 of its potential returns per unit of risk. Linde PLC is currently generating about 0.07 per unit of risk. If you would invest 1,900 in G III Apparel Group on September 12, 2024 and sell it today you would earn a total of 1,060 from holding G III Apparel Group or generate 55.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. Linde PLC
Performance |
| Timeline |
| G III Apparel |
| Linde PLC |
G III and Linde PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and Linde PLC
The main advantage of trading using opposite G III and Linde PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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.| G III vs. Strategic Education | G III vs. Magic Software Enterprises | G III vs. IDP EDUCATION LTD | G III vs. TAL Education Group |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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