Correlation Between Aquagold International and Linde Plc

Can any of the company-specific risk be diversified away by investing in both Aquagold International 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 Aquagold International and Linde Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and Linde plc Ordinary, you can compare the effects of market volatilities on Aquagold International 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 Aquagold International with a short position of Linde Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Linde Plc.

Diversification Opportunities for Aquagold International and Linde Plc

0.15

Correlation Coefficient

Aquagold International  Linde Plc

Average diversification

The 3 months correlation between Aquagold and Linde is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Linde plc Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde plc Ordinary and Aquagold International 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 Aquagold International 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 Ordinary has no effect on the direction of Aquagold International i.e., Aquagold International and Linde Plc go up and down completely randomly.

Pair Corralation between Aquagold International and Linde Plc

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Linde Plc. In addition to that, Aquagold International is 12.9 times more volatile than Linde plc Ordinary. It trades about -0.17 of its total potential returns per unit of risk. Linde plc Ordinary is currently generating about 0.04 per unit of volatility. If you would invest  45,830  in Linde plc Ordinary on December 1, 2024 and sell it today you would earn a total of  875.00  from holding Linde plc Ordinary or generate 1.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Aquagold International  vs.  Linde plc Ordinary

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Linde plc Ordinary

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Linde plc Ordinary are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Linde Plc is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and Linde Plc

The main advantage of trading using opposite Aquagold International and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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 Aquagold International and Linde plc Ordinary 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.