Correlation Between Graines Voltz and Linedata Services

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

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

Diversification Opportunities for Graines Voltz and Linedata Services

0.34

Correlation Coefficient

Graines Voltz  Linedata Services

Weak diversification

The 3 months correlation between Graines and Linedata is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Graines Voltz SA and Linedata Services SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linedata Services and Graines Voltz 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 Graines Voltz SA 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 Graines Voltz i.e., Graines Voltz and Linedata Services go up and down completely randomly.

Pair Corralation between Graines Voltz and Linedata Services

Assuming the 90 days trading horizon Graines Voltz SA is expected to under-perform the Linedata Services. In addition to that, Graines Voltz is 1.25 times more volatile than Linedata Services SA. It trades about -0.07 of its total potential returns per unit of risk. Linedata Services SA is currently generating about 0.07 per unit of volatility. If you would invest  7,020  in Linedata Services SA on September 5, 2024 and sell it today you would earn a total of  680.00  from holding Linedata Services SA or generate 9.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Graines Voltz SA  vs.  Linedata Services SA

Graines Voltz SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graines Voltz 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.

Linedata Services

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Linedata Services SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Linedata Services sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graines Voltz and Linedata Services

The main advantage of trading using opposite Graines Voltz and Linedata Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graines Voltz 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 Graines Voltz SA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.