Correlation Between International Flavors and Linde Plc

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Can any of the company-specific risk be diversified away by investing in both International Flavors 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 International Flavors and Linde Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Flavors Fragrances and Linde Plc, you can compare the effects of market volatilities on International Flavors 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 International Flavors with a short position of Linde Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Flavors and Linde Plc.

Diversification Opportunities for International Flavors and Linde Plc

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between International and Linde is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding International Flavors Fragranc and Linde Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde Plc and International Flavors 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 International Flavors Fragrances 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 has no effect on the direction of International Flavors i.e., International Flavors and Linde Plc go up and down completely randomly.

Pair Corralation between International Flavors and Linde Plc

Considering the 90-day investment horizon International Flavors Fragrances is expected to under-perform the Linde Plc. In addition to that, International Flavors is 1.09 times more volatile than Linde Plc. It trades about -0.1 of its total potential returns per unit of risk. Linde Plc is currently generating about -0.04 per unit of volatility. If you would invest  32,229  in Linde Plc on July 2, 2022 and sell it today you would lose (5,270)  from holding Linde Plc or give up 16.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

International Flavors Fragranc  vs.  Linde Plc

 Performance (%) 
       Timeline  
International Flavors 
International Performance
0 of 100
Over the last 90 days International Flavors Fragrances has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

International Price Channel

Linde Plc 
Linde Performance
0 of 100
Over the last 90 days Linde Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Linde Plc is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Linde Price Channel

International Flavors and Linde Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with International Flavors and Linde Plc

The main advantage of trading using opposite International Flavors and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Flavors 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.
International Flavors vs. Amazon Inc
The idea behind International Flavors Fragrances and Linde Plc 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.
Linde Plc vs. Amazon Inc
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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