Correlation Between Linde Plc and GLOBUS MEDICAL

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

By analyzing existing cross correlation between Linde plc and GLOBUS MEDICAL A, you can compare the effects of market volatilities on Linde Plc and GLOBUS MEDICAL 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 GLOBUS MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linde Plc and GLOBUS MEDICAL.

Diversification Opportunities for Linde Plc and GLOBUS MEDICAL

-0.42

Correlation Coefficient

Linde Plc  GLOBUS MEDICAL

Very good diversification

The 3 months correlation between Linde and GLOBUS is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Linde plc and GLOBUS MEDICAL A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLOBUS MEDICAL A 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 GLOBUS MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLOBUS MEDICAL A has no effect on the direction of Linde Plc i.e., Linde Plc and GLOBUS MEDICAL go up and down completely randomly.

Pair Corralation between Linde Plc and GLOBUS MEDICAL

Assuming the 90 days trading horizon Linde Plc is expected to generate 2.75 times less return on investment than GLOBUS MEDICAL. But when comparing it to its historical volatility, Linde plc is 1.69 times less risky than GLOBUS MEDICAL. It trades about 0.08 of its potential returns per unit of risk. GLOBUS MEDICAL A is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,320  in GLOBUS MEDICAL A on October 27, 2024 and sell it today you would earn a total of  4,480  from holding GLOBUS MEDICAL A or generate 103.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.68%
Values	Daily Returns

Linde plc  vs.  GLOBUS MEDICAL A

Linde plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Linde plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Linde Plc is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GLOBUS MEDICAL A

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Linde Plc and GLOBUS MEDICAL

The main advantage of trading using opposite Linde Plc and GLOBUS MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde Plc position performs unexpectedly, GLOBUS MEDICAL 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 GLOBUS MEDICAL will offset losses from the drop in GLOBUS MEDICAL's long position.

The idea behind Linde plc and GLOBUS MEDICAL A 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.