Correlation Between Linde Plc and Wacker Chemie
Can any of the company-specific risk be diversified away by investing in both Linde Plc and Wacker Chemie 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 Wacker Chemie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linde plc Ordinary and Wacker Chemie AG, you can compare the effects of market volatilities on Linde Plc and Wacker Chemie 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 Wacker Chemie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linde Plc and Wacker Chemie.
Diversification Opportunities for Linde Plc and Wacker Chemie
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Linde and Wacker is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Linde plc Ordinary and Wacker Chemie AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wacker Chemie AG 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 Ordinary are associated (or correlated) with Wacker Chemie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wacker Chemie AG has no effect on the direction of Linde Plc i.e., Linde Plc and Wacker Chemie go up and down completely randomly.
Pair Corralation between Linde Plc and Wacker Chemie
Considering the 90-day investment horizon Linde plc Ordinary is expected to generate 0.36 times more return on investment than Wacker Chemie. However, Linde plc Ordinary is 2.75 times less risky than Wacker Chemie. It trades about 0.06 of its potential returns per unit of risk. Wacker Chemie AG is currently generating about -0.13 per unit of risk. If you would invest 43,167 in Linde plc Ordinary on August 30, 2024 and sell it today you would earn a total of 2,545 from holding Linde plc Ordinary or generate 5.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linde plc Ordinary vs. Wacker Chemie AG
Performance |
| Timeline |
| Linde plc Ordinary |
| Wacker Chemie AG |
Linde Plc and Wacker Chemie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linde Plc and Wacker Chemie
The main advantage of trading using opposite Linde Plc and Wacker Chemie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde Plc position performs unexpectedly, Wacker Chemie 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 Wacker Chemie will offset losses from the drop in Wacker Chemie's long position.| Linde Plc vs. PPG Industries | Linde Plc vs. Ecolab Inc | Linde Plc vs. Sherwin Williams Co | Linde Plc vs. LyondellBasell Industries NV |
| Wacker Chemie vs. Akzo Nobel NV | Wacker Chemie vs. Avoca LLC | Wacker Chemie vs. Arkema SA ADR | Wacker Chemie vs. HUMANA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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