Correlation Between Linedata Services and Compagnie
Can any of the company-specific risk be diversified away by investing in both Linedata Services and Compagnie 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 Linedata Services and Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linedata Services SA and Compagnie Du Mont Blanc, you can compare the effects of market volatilities on Linedata Services and Compagnie 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 Linedata Services with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linedata Services and Compagnie.
Diversification Opportunities for Linedata Services and Compagnie
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Linedata and Compagnie is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Linedata Services SA and Compagnie Du Mont Blanc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Du Mont and Linedata Services 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 Linedata Services SA are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Du Mont has no effect on the direction of Linedata Services i.e., Linedata Services and Compagnie go up and down completely randomly.
Pair Corralation between Linedata Services and Compagnie
Assuming the 90 days trading horizon Linedata Services SA is expected to generate 1.11 times more return on investment than Compagnie. However, Linedata Services is 1.11 times more volatile than Compagnie Du Mont Blanc. It trades about 0.09 of its potential returns per unit of risk. Compagnie Du Mont Blanc is currently generating about 0.05 per unit of risk. If you would invest 5,384 in Linedata Services SA on September 15, 2024 and sell it today you would earn a total of 2,696 from holding Linedata Services SA or generate 50.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linedata Services SA vs. Compagnie Du Mont Blanc
Performance |
| Timeline |
| Linedata Services |
| Compagnie Du Mont |
Linedata Services and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linedata Services and Compagnie
The main advantage of trading using opposite Linedata Services and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linedata Services position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Linedata Services vs. Sword Group SE | Linedata Services vs. Lectra SA | Linedata Services vs. Neurones | Linedata Services vs. Aubay Socit Anonyme |
| Compagnie vs. Compagnie des Alpes | Compagnie vs. Groupe Partouche SA | Compagnie vs. IDI SCA | Compagnie vs. Linedata Services SA |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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