Correlation Between Linde PLC and SIKA AG
Can any of the company-specific risk be diversified away by investing in both Linde PLC and SIKA AG 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 SIKA AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linde PLC and SIKA AG UNSPADR, you can compare the effects of market volatilities on Linde PLC and SIKA AG 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 SIKA AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linde PLC and SIKA AG.
Diversification Opportunities for Linde PLC and SIKA AG
Weak diversification
The 3 months correlation between Linde and SIKA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Linde PLC and SIKA AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIKA AG UNSPADR 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 SIKA AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIKA AG UNSPADR has no effect on the direction of Linde PLC i.e., Linde PLC and SIKA AG go up and down completely randomly.
Pair Corralation between Linde PLC and SIKA AG
Assuming the 90 days trading horizon Linde PLC is expected to generate 0.52 times more return on investment than SIKA AG. However, Linde PLC is 1.93 times less risky than SIKA AG. It trades about -0.09 of its potential returns per unit of risk. SIKA AG UNSPADR is currently generating about -0.2 per unit of risk. If you would invest 42,823 in Linde PLC on September 23, 2024 and sell it today you would lose (2,223) from holding Linde PLC or give up 5.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Linde PLC vs. SIKA AG UNSPADR
Performance |
Timeline |
Linde PLC |
SIKA AG UNSPADR |
Linde PLC and SIKA AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Linde PLC and SIKA AG
The main advantage of trading using opposite Linde PLC and SIKA AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde PLC position performs unexpectedly, SIKA AG 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 SIKA AG will offset losses from the drop in SIKA AG'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 |
SIKA AG vs. Linde plc | SIKA AG vs. Linde PLC | SIKA AG vs. Air Liquide SA | SIKA AG 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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