Correlation Between Semtech and Linde Plc

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

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

Diversification Opportunities for Semtech and Linde Plc

-0.29

Correlation Coefficient

Semtech  Linde Plc

Very good diversification

The 3 months correlation between Semtech and Linde is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Linde plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde plc and Semtech 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 Semtech 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 Semtech i.e., Semtech and Linde Plc go up and down completely randomly.

Pair Corralation between Semtech and Linde Plc

Assuming the 90 days horizon Semtech is expected to generate 4.02 times more return on investment than Linde Plc. However, Semtech is 4.02 times more volatile than Linde plc. It trades about 0.14 of its potential returns per unit of risk. Linde plc is currently generating about 0.02 per unit of risk. If you would invest  3,441  in Semtech on May 18, 2025 and sell it today you would earn a total of  1,062  from holding Semtech or generate 30.86% return on investment over 90 days.

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

Semtech  vs.  Linde plc

Semtech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Semtech reported solid returns over the last few months and may actually be approaching a breakup point.

Linde plc

Risk-Adjusted Performance

Weakest

Compared to the overall equity markets, risk-adjusted returns on investments in Linde plc are ranked lower than 1 (%) 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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Semtech and Linde Plc

The main advantage of trading using opposite Semtech and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech 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 Semtech 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.