Correlation Between Linde PLC and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both Linde PLC and Sanyo 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 Sanyo 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 Sanyo Chemical Industries, you can compare the effects of market volatilities on Linde PLC and Sanyo 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linde PLC and Sanyo Chemical.
Diversification Opportunities for Linde PLC and Sanyo Chemical
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Linde and Sanyo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Linde PLC and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of Linde PLC i.e., Linde PLC and Sanyo Chemical go up and down completely randomly.
Pair Corralation between Linde PLC and Sanyo Chemical
Assuming the 90 days trading horizon Linde PLC is expected to generate 1.02 times more return on investment than Sanyo Chemical. However, Linde PLC is 1.02 times more volatile than Sanyo Chemical Industries. It trades about 0.46 of its potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.04 per unit of risk. If you would invest 39,980 in Linde PLC on November 7, 2024 and sell it today you would earn a total of 3,900 from holding Linde PLC or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linde PLC vs. Sanyo Chemical Industries
Performance |
| Timeline |
| Linde PLC |
| Sanyo Chemical Industries |
Linde PLC and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linde PLC and Sanyo Chemical
The main advantage of trading using opposite Linde PLC and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde PLC position performs unexpectedly, Sanyo 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical's long position.| Linde PLC vs. Delta Electronics Public | Linde PLC vs. Electronic Arts | Linde PLC vs. COMPUTERSHARE | Linde PLC vs. Rocket Internet SE |
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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 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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