Correlation Between Linewell Software and Dawning Information

Can any of the company-specific risk be diversified away by investing in both Linewell Software and Dawning Information 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 Linewell Software and Dawning Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Linewell Software Co and Dawning Information Industry, you can compare the effects of market volatilities on Linewell Software and Dawning Information 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 Linewell Software with a short position of Dawning Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linewell Software and Dawning Information.

Diversification Opportunities for Linewell Software and Dawning Information

0.51

Correlation Coefficient

Linewell Software  Dawning Information

Very weak diversification

The 3 months correlation between Linewell and Dawning is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Linewell Software Co and Dawning Information Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawning Information and Linewell Software 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 Linewell Software Co are associated (or correlated) with Dawning Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawning Information has no effect on the direction of Linewell Software i.e., Linewell Software and Dawning Information go up and down completely randomly.

Pair Corralation between Linewell Software and Dawning Information

Assuming the 90 days trading horizon Linewell Software Co is expected to generate 1.35 times more return on investment than Dawning Information. However, Linewell Software is 1.35 times more volatile than Dawning Information Industry. It trades about 0.12 of its potential returns per unit of risk. Dawning Information Industry is currently generating about -0.09 per unit of risk. If you would invest  1,060  in Linewell Software Co on December 25, 2024 and sell it today you would earn a total of  256.00  from holding Linewell Software Co or generate 24.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Linewell Software Co  vs.  Dawning Information Industry

Linewell Software

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Linewell Software Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Linewell Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Dawning Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dawning Information Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Linewell Software and Dawning Information

The main advantage of trading using opposite Linewell Software and Dawning Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linewell Software position performs unexpectedly, Dawning Information 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 Dawning Information will offset losses from the drop in Dawning Information's long position.

The idea behind Linewell Software Co and Dawning Information Industry pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.