Correlation Between Linde Plc and Albemarle

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

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

Diversification Opportunities for Linde Plc and Albemarle

0.05

Correlation Coefficient

Linde Plc  Albemarle

Significant diversification

The 3 months correlation between Linde and Albemarle is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Linde plc and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle 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 Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of Linde Plc i.e., Linde Plc and Albemarle go up and down completely randomly.

Pair Corralation between Linde Plc and Albemarle

Assuming the 90 days horizon Linde Plc is expected to generate 9.42 times less return on investment than Albemarle. But when comparing it to its historical volatility, Linde plc is 3.28 times less risky than Albemarle. It trades about 0.06 of its potential returns per unit of risk. Albemarle is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,884  in Albemarle on April 23, 2025 and sell it today you would earn a total of  1,700  from holding Albemarle or generate 34.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Linde plc  vs.  Albemarle

Linde plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Linde plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Linde Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Albemarle

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Albemarle are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Albemarle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Linde Plc and Albemarle

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

The idea behind Linde plc and Albemarle 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.