Correlation Between Fuchs Petrolub and Linde Plc

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

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

Diversification Opportunities for Fuchs Petrolub and Linde Plc

0.79

Correlation Coefficient

Fuchs Petrolub  Linde Plc

Poor diversification

The 3 months correlation between Fuchs and Linde is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fuchs Petrolub SE 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 Fuchs Petrolub 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 Fuchs Petrolub SE 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 Fuchs Petrolub i.e., Fuchs Petrolub and Linde Plc go up and down completely randomly.

Pair Corralation between Fuchs Petrolub and Linde Plc

Assuming the 90 days horizon Fuchs Petrolub SE is expected to generate 2.49 times more return on investment than Linde Plc. However, Fuchs Petrolub is 2.49 times more volatile than Linde plc Ordinary. It trades about 0.11 of its potential returns per unit of risk. Linde plc Ordinary is currently generating about 0.2 per unit of risk. If you would invest  1,080  in Fuchs Petrolub SE on December 28, 2024 and sell it today you would earn a total of  167.00  from holding Fuchs Petrolub SE or generate 15.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Fuchs Petrolub SE  vs.  Linde plc Ordinary

Fuchs Petrolub SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fuchs Petrolub SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Fuchs Petrolub showed solid returns over the last few months and may actually be approaching a breakup point.

Linde plc Ordinary

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Linde plc Ordinary are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Linde Plc may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fuchs Petrolub and Linde Plc

The main advantage of trading using opposite Fuchs Petrolub and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuchs Petrolub 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 Fuchs Petrolub SE 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..