Correlation Between Aubay Socit and Linedata Services

Can any of the company-specific risk be diversified away by investing in both Aubay Socit and Linedata Services 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 Aubay Socit and Linedata Services into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aubay Socit Anonyme and Linedata Services SA, you can compare the effects of market volatilities on Aubay Socit and Linedata Services 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 Aubay Socit with a short position of Linedata Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aubay Socit and Linedata Services.

Diversification Opportunities for Aubay Socit and Linedata Services

-0.15

Correlation Coefficient

Aubay Socit  Linedata Services

Good diversification

The 3 months correlation between Aubay and Linedata is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aubay Socit Anonyme and Linedata Services SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linedata Services and Aubay Socit 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 Aubay Socit Anonyme are associated (or correlated) with Linedata Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linedata Services has no effect on the direction of Aubay Socit i.e., Aubay Socit and Linedata Services go up and down completely randomly.

Pair Corralation between Aubay Socit and Linedata Services

Assuming the 90 days trading horizon Aubay Socit Anonyme is expected to generate 1.05 times more return on investment than Linedata Services. However, Aubay Socit is 1.05 times more volatile than Linedata Services SA. It trades about 0.07 of its potential returns per unit of risk. Linedata Services SA is currently generating about -0.06 per unit of risk. If you would invest  4,505  in Aubay Socit Anonyme on December 30, 2024 and sell it today you would earn a total of  295.00  from holding Aubay Socit Anonyme or generate 6.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aubay Socit Anonyme  vs.  Linedata Services SA

Aubay Socit Anonyme

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aubay Socit Anonyme are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Aubay Socit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Linedata Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Linedata Services SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aubay Socit and Linedata Services

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

The idea behind Aubay Socit Anonyme and Linedata Services SA 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.