Correlation Between Linde PLC and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Linde PLC and Quaker Chemical 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 Linde PLC and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linde PLC and Quaker Chemical, you can compare the effects of market volatilities on Linde PLC and Quaker Chemical 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 Linde PLC with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linde PLC and Quaker Chemical.
Diversification Opportunities for Linde PLC and Quaker Chemical
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Linde and Quaker is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Linde PLC and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and Linde PLC 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 Linde PLC are associated (or correlated) with Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Linde PLC i.e., Linde PLC and Quaker Chemical go up and down completely randomly.
Pair Corralation between Linde PLC and Quaker Chemical
Assuming the 90 days trading horizon Linde PLC is expected to generate 0.47 times more return on investment than Quaker Chemical. However, Linde PLC is 2.13 times less risky than Quaker Chemical. It trades about -0.4 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.47 per unit of risk. If you would invest 43,122 in Linde PLC on September 24, 2024 and sell it today you would lose (2,522) from holding Linde PLC or give up 5.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linde PLC vs. Quaker Chemical
Performance |
| Timeline |
| Linde PLC |
| Quaker Chemical |
Linde PLC and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linde PLC and Quaker Chemical
The main advantage of trading using opposite Linde PLC and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde PLC position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Linde PLC vs. Linde plc | Linde PLC vs. Air Liquide SA | Linde PLC vs. The Sherwin Williams | Linde PLC vs. Ecolab Inc |
| Quaker Chemical vs. Linde plc | Quaker Chemical vs. Linde PLC | Quaker Chemical vs. Air Liquide SA | Quaker Chemical vs. The Sherwin Williams |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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