Correlation Between Linedata Services and CHINA WATER
Can any of the company-specific risk be diversified away by investing in both Linedata Services and CHINA WATER 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 CHINA WATER 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 CHINA WATER IGR, you can compare the effects of market volatilities on Linedata Services and CHINA WATER 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 CHINA WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linedata Services and CHINA WATER.
Diversification Opportunities for Linedata Services and CHINA WATER
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Linedata and CHINA is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Linedata Services SA and CHINA WATER IGR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA WATER IGR 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 CHINA WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA WATER IGR has no effect on the direction of Linedata Services i.e., Linedata Services and CHINA WATER go up and down completely randomly.
Pair Corralation between Linedata Services and CHINA WATER
Assuming the 90 days trading horizon Linedata Services SA is expected to generate 0.08 times more return on investment than CHINA WATER. However, Linedata Services SA is 12.24 times less risky than CHINA WATER. It trades about -0.05 of its potential returns per unit of risk. CHINA WATER IGR is currently generating about -0.21 per unit of risk. If you would invest 8,160 in Linedata Services SA on November 3, 2024 and sell it today you would lose (120.00) from holding Linedata Services SA or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Linedata Services SA vs. CHINA WATER IGR
Performance |
| Timeline |
| Linedata Services |
| CHINA WATER IGR |
Linedata Services and CHINA WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linedata Services and CHINA WATER
The main advantage of trading using opposite Linedata Services and CHINA WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linedata Services position performs unexpectedly, CHINA WATER 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 CHINA WATER will offset losses from the drop in CHINA WATER's long position.| Linedata Services vs. FORMPIPE SOFTWARE AB | Linedata Services vs. UPDATE SOFTWARE | Linedata Services vs. OPERA SOFTWARE | Linedata Services vs. Easy Software AG |
| CHINA WATER vs. Apple Inc | CHINA WATER vs. Apple Inc | CHINA WATER vs. Apple Inc | CHINA WATER vs. Apple Inc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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