Correlation Between Eutelsat Communications and Linedata Services
Can any of the company-specific risk be diversified away by investing in both Eutelsat Communications and Linedata Services 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 Eutelsat Communications and Linedata Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eutelsat Communications SA and Linedata Services SA, you can compare the effects of market volatilities on Eutelsat Communications and Linedata Services 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 Eutelsat Communications with a short position of Linedata Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eutelsat Communications and Linedata Services.
Diversification Opportunities for Eutelsat Communications and Linedata Services
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eutelsat and Linedata is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eutelsat Communications SA and Linedata Services SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linedata Services and Eutelsat Communications 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 Eutelsat Communications SA are associated (or correlated) with Linedata Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linedata Services has no effect on the direction of Eutelsat Communications i.e., Eutelsat Communications and Linedata Services go up and down completely randomly.
Pair Corralation between Eutelsat Communications and Linedata Services
Assuming the 90 days trading horizon Eutelsat Communications SA is expected to under-perform the Linedata Services. In addition to that, Eutelsat Communications is 1.34 times more volatile than Linedata Services SA. It trades about -0.06 of its total potential returns per unit of risk. Linedata Services SA is currently generating about 0.08 per unit of volatility. If you would invest 4,800 in Linedata Services SA on August 31, 2024 and sell it today you would earn a total of 3,200 from holding Linedata Services SA or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eutelsat Communications SA vs. Linedata Services SA
Performance |
| Timeline |
| Eutelsat Communications |
| Linedata Services |
Eutelsat Communications and Linedata Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eutelsat Communications and Linedata Services
The main advantage of trading using opposite Eutelsat Communications and Linedata Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eutelsat Communications position performs unexpectedly, Linedata Services 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 Linedata Services will offset losses from the drop in Linedata Services' long position.| Eutelsat Communications vs. Rubis SCA | Eutelsat Communications vs. Coface SA | Eutelsat Communications vs. SCOR SE | Eutelsat Communications vs. Nexity |
| Linedata Services vs. Sword Group SE | Linedata Services vs. Lectra SA | Linedata Services vs. Neurones | Linedata Services vs. Aubay Socit Anonyme |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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