Correlation Between Linedata Services and Sixt SE

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

Diversification Opportunities for Linedata Services and Sixt SE

-0.29

Correlation Coefficient

Linedata Services  Sixt SE

Very good diversification

The 3 months correlation between Linedata and Sixt is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Linedata Services SA and Sixt SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt SE 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 Sixt SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt SE has no effect on the direction of Linedata Services i.e., Linedata Services and Sixt SE go up and down completely randomly.

Pair Corralation between Linedata Services and Sixt SE

Assuming the 90 days trading horizon Linedata Services SA is expected to under-perform the Sixt SE. But the stock apears to be less risky and, when comparing its historical volatility, Linedata Services SA is 1.03 times less risky than Sixt SE. The stock trades about -0.02 of its potential returns per unit of risk. The Sixt SE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,640  in Sixt SE on December 22, 2024 and sell it today you would earn a total of  200.00  from holding Sixt SE or generate 3.55% 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.  Sixt SE

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. In spite of comparatively stable basic indicators, Linedata Services is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sixt SE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sixt SE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Linedata Services and Sixt SE

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

The idea behind Linedata Services SA and Sixt SE 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.