Correlation Between Aristocrat Leisure and Linde Plc

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

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

Diversification Opportunities for Aristocrat Leisure and Linde Plc

0.0

Correlation Coefficient

Aristocrat Leisure  Linde Plc

Pay attention - limited upside

The 3 months correlation between Aristocrat and Linde is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and Linde plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde plc and Aristocrat Leisure 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 Aristocrat Leisure Limited 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 Aristocrat Leisure i.e., Aristocrat Leisure and Linde Plc go up and down completely randomly.

Pair Corralation between Aristocrat Leisure and Linde Plc

If you would invest (100.00) in Linde plc on February 3, 2025 and sell it today you would earn a total of  100.00  from holding Linde plc or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Aristocrat Leisure Limited  vs.  Linde plc

Aristocrat Leisure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aristocrat Leisure Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Linde plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Linde plc has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Aristocrat Leisure and Linde Plc

The main advantage of trading using opposite Aristocrat Leisure and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure 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 Aristocrat Leisure Limited 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.