Correlation Between Linde Plc and Ashland Global

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

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

Diversification Opportunities for Linde Plc and Ashland Global

-0.47

Correlation Coefficient

Linde Plc  Ashland Global

Very good diversification

The 3 months correlation between Linde and Ashland is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Linde plc Ordinary and Ashland Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashland Global Holdings 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 Ordinary are associated (or correlated) with Ashland Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashland Global Holdings has no effect on the direction of Linde Plc i.e., Linde Plc and Ashland Global go up and down completely randomly.

Pair Corralation between Linde Plc and Ashland Global

Considering the 90-day investment horizon Linde plc Ordinary is expected to under-perform the Ashland Global. But the stock apears to be less risky and, when comparing its historical volatility, Linde plc Ordinary is 1.02 times less risky than Ashland Global. The stock trades about -0.16 of its potential returns per unit of risk. The Ashland Global Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,721  in Ashland Global Holdings on March 1, 2024 and sell it today you would earn a total of  242.00  from holding Ashland Global Holdings or generate 2.49% return on investment over 90 days.

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

Linde plc Ordinary  vs.  Ashland Global Holdings

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 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.

Ashland Global Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ashland Global Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Ashland Global is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Linde Plc and Ashland Global

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

The idea behind Linde plc Ordinary and Ashland Global Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.