Correlation Between Avantor and Linde Plc

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

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

Diversification Opportunities for Avantor and Linde Plc

-0.61

Correlation Coefficient

Avantor  Linde Plc

Excellent diversification

The 3 months correlation between Avantor and Linde is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Avantor 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 Avantor 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 Avantor 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 Avantor i.e., Avantor and Linde Plc go up and down completely randomly.

Pair Corralation between Avantor and Linde Plc

Given the investment horizon of 90 days Avantor is expected to under-perform the Linde Plc. In addition to that, Avantor is 2.24 times more volatile than Linde plc Ordinary. It trades about -0.16 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Avantor  vs.  Linde plc Ordinary

Avantor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avantor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 Avantor and Linde Plc

The main advantage of trading using opposite Avantor and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantor 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 Avantor 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.