Correlation Between Linedata Services and Intrasense

Can any of the company-specific risk be diversified away by investing in both Linedata Services and Intrasense 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 Intrasense 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 Intrasense, you can compare the effects of market volatilities on Linedata Services and Intrasense 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 Intrasense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linedata Services and Intrasense.

Diversification Opportunities for Linedata Services and Intrasense

-0.21

Correlation Coefficient

Linedata Services  Intrasense

Very good diversification

The 3 months correlation between Linedata and Intrasense is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Linedata Services SA and Intrasense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrasense 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 Intrasense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrasense has no effect on the direction of Linedata Services i.e., Linedata Services and Intrasense go up and down completely randomly.

Pair Corralation between Linedata Services and Intrasense

Assuming the 90 days trading horizon Linedata Services SA is expected to generate 0.3 times more return on investment than Intrasense. However, Linedata Services SA is 3.3 times less risky than Intrasense. It trades about 0.1 of its potential returns per unit of risk. Intrasense is currently generating about 0.0 per unit of risk. If you would invest  6,860  in Linedata Services SA on September 4, 2024 and sell it today you would earn a total of  820.00  from holding Linedata Services SA or generate 11.95% return on investment over 90 days.

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

Linedata Services SA  vs.  Intrasense

Linedata Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Linedata Services SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Linedata Services may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intrasense

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intrasense has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Intrasense is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Linedata Services and Intrasense

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

The idea behind Linedata Services SA and Intrasense 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.