Correlation Between Linedata Services and Gold Road
Can any of the company-specific risk be diversified away by investing in both Linedata Services and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Linedata Services and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linedata Services and Gold Road.
Diversification Opportunities for Linedata Services and Gold Road
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Linedata and Gold is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Linedata Services SA and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Linedata Services i.e., Linedata Services and Gold Road go up and down completely randomly.
Pair Corralation between Linedata Services and Gold Road
Assuming the 90 days trading horizon Linedata Services is expected to generate 15.18 times less return on investment than Gold Road. But when comparing it to its historical volatility, Linedata Services SA is 1.33 times less risky than Gold Road. It trades about 0.03 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 118.00 in Gold Road Resources on October 30, 2024 and sell it today you would earn a total of 27.00 from holding Gold Road Resources or generate 22.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linedata Services SA vs. Gold Road Resources
Performance |
| Timeline |
| Linedata Services |
| Gold Road Resources |
Linedata Services and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linedata Services and Gold Road
The main advantage of trading using opposite Linedata Services and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linedata Services position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Linedata Services vs. Apple Inc | Linedata Services vs. Apple Inc | Linedata Services vs. Apple Inc | Linedata Services vs. Apple Inc |
| Gold Road vs. CN DATANG C | Gold Road vs. Dairy Farm International | Gold Road vs. INFORMATION SVC GRP | Gold Road vs. NTT DATA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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