Correlation Between NEO PERFORMMAT and Linde PLC

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Can any of the company-specific risk be diversified away by investing in both NEO PERFORMMAT 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 NEO PERFORMMAT and Linde PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEO PERFORMMAT and Linde PLC, you can compare the effects of market volatilities on NEO PERFORMMAT 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 NEO PERFORMMAT with a short position of Linde PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEO PERFORMMAT and Linde PLC.

Diversification Opportunities for NEO PERFORMMAT and Linde PLC

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between NEO and Linde is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding NEO PERFORMMAT and Linde PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde PLC and NEO PERFORMMAT 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 NEO PERFORMMAT 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 NEO PERFORMMAT i.e., NEO PERFORMMAT and Linde PLC go up and down completely randomly.

Pair Corralation between NEO PERFORMMAT and Linde PLC

Assuming the 90 days horizon NEO PERFORMMAT is expected to generate 3.03 times more return on investment than Linde PLC. However, NEO PERFORMMAT is 3.03 times more volatile than Linde PLC. It trades about 0.0 of its potential returns per unit of risk. Linde PLC is currently generating about -0.01 per unit of risk. If you would invest  543.00  in NEO PERFORMMAT on September 26, 2024 and sell it today you would lose (27.00) from holding NEO PERFORMMAT or give up 4.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

NEO PERFORMMAT  vs.  Linde PLC

 Performance 
       Timeline  
NEO PERFORMMAT 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in NEO PERFORMMAT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NEO PERFORMMAT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Linde PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Linde PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Linde PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

NEO PERFORMMAT and Linde PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NEO PERFORMMAT and Linde PLC

The main advantage of trading using opposite NEO PERFORMMAT and Linde PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEO PERFORMMAT 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.
The idea behind NEO PERFORMMAT and Linde PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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