Correlation Between Linedata Services and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Linedata Services and Sandfire Resources 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 Sandfire Resources 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 Sandfire Resources Limited, you can compare the effects of market volatilities on Linedata Services and Sandfire Resources 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linedata Services and Sandfire Resources.
Diversification Opportunities for Linedata Services and Sandfire Resources
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Linedata and Sandfire is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Linedata Services SA and Sandfire Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Linedata Services i.e., Linedata Services and Sandfire Resources go up and down completely randomly.
Pair Corralation between Linedata Services and Sandfire Resources
Assuming the 90 days trading horizon Linedata Services SA is expected to generate 0.7 times more return on investment than Sandfire Resources. However, Linedata Services SA is 1.43 times less risky than Sandfire Resources. It trades about 0.03 of its potential returns per unit of risk. Sandfire Resources Limited is currently generating about -0.06 per unit of risk. If you would invest 7,960 in Linedata Services SA on October 26, 2024 and sell it today you would earn a total of 120.00 from holding Linedata Services SA or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Linedata Services SA vs. Sandfire Resources Limited
Performance |
| Timeline |
| Linedata Services |
| Sandfire Resources |
Linedata Services and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linedata Services and Sandfire Resources
The main advantage of trading using opposite Linedata Services and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linedata Services position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| Linedata Services vs. SPORT LISBOA E | Linedata Services vs. SBI Insurance Group | Linedata Services vs. UNIQA INSURANCE GR | Linedata Services vs. Gaztransport Technigaz SA |
| Sandfire Resources vs. Canon Marketing Japan | Sandfire Resources vs. Salesforce | Sandfire Resources vs. HELIOS TECHS INC | Sandfire Resources vs. FLOW TRADERS LTD |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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