Correlation Between HEXPOL AB and Linde Plc

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

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

Diversification Opportunities for HEXPOL AB and Linde Plc

0.47

Correlation Coefficient

HEXPOL AB  Linde Plc

Very weak diversification

The 3 months correlation between HEXPOL and Linde is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding HEXPOL AB 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 HEXPOL AB 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 HEXPOL AB 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 HEXPOL AB i.e., HEXPOL AB and Linde Plc go up and down completely randomly.

Pair Corralation between HEXPOL AB and Linde Plc

Assuming the 90 days horizon HEXPOL AB is expected to under-perform the Linde Plc. In addition to that, HEXPOL AB is 1.99 times more volatile than Linde plc Ordinary. It trades about -0.08 of its total potential returns per unit of risk. Linde plc Ordinary is currently generating about 0.0 per unit of volatility. If you would invest  42,639  in Linde plc Ordinary on September 29, 2024 and sell it today you would lose (341.00) from holding Linde plc Ordinary or give up 0.8% of portfolio value over 90 days.

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

HEXPOL AB  vs.  Linde plc Ordinary

HEXPOL AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEXPOL AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Linde plc Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Linde plc Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with HEXPOL AB and Linde Plc

The main advantage of trading using opposite HEXPOL AB and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEXPOL AB 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 HEXPOL AB 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.