Correlation Between RPM International and Linde Plc

Can any of the company-specific risk be diversified away by investing in both RPM 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 RPM 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 RPM International and Linde plc Ordinary, you can compare the effects of market volatilities on RPM 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 RPM International with a short position of Linde Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of RPM International and Linde Plc.

Diversification Opportunities for RPM International and Linde Plc

-0.3

Correlation Coefficient

RPM International  Linde Plc

Very good diversification

The 3 months correlation between RPM and Linde is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding RPM 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 RPM 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 RPM 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 RPM International i.e., RPM International and Linde Plc go up and down completely randomly.

Pair Corralation between RPM International and Linde Plc

Considering the 90-day investment horizon RPM International is expected to under-perform the Linde Plc. In addition to that, RPM International is 1.39 times more volatile than Linde plc Ordinary. It trades about -0.09 of its total potential returns per unit of risk. Linde plc Ordinary is currently generating about 0.14 per unit of volatility. If you would invest  42,291  in Linde plc Ordinary on December 26, 2024 and sell it today you would earn a total of  3,454  from holding Linde plc Ordinary or generate 8.17% return on investment over 90 days.

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

RPM International  vs.  Linde plc Ordinary

RPM International

Risk-Adjusted Performance

Very Weak

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

Linde plc Ordinary

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Linde plc Ordinary are ranked lower than 11 (%) 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 RPM International and Linde Plc

The main advantage of trading using opposite RPM International and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RPM 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 RPM 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.