Correlation Between Guandao Puer and Linedata Services

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

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

Diversification Opportunities for Guandao Puer and Linedata Services

0.0

Correlation Coefficient

Guandao Puer  Linedata Services

Pay attention - limited upside

The 3 months correlation between Guandao and Linedata is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Guandao Puer Investment and Linedata Services SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linedata Services and Guandao Puer 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 Guandao Puer Investment 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 Guandao Puer i.e., Guandao Puer and Linedata Services go up and down completely randomly.

Pair Corralation between Guandao Puer and Linedata Services

If you would invest  7,900  in Linedata Services SA on October 4, 2024 and sell it today you would earn a total of  660.00  from holding Linedata Services SA or generate 8.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Guandao Puer Investment  vs.  Linedata Services SA

Guandao Puer Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Linedata Services

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Linedata Services SA are ranked lower than 7 (%) 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 February 2025.

Pair Trading with Guandao Puer and Linedata Services

The main advantage of trading using opposite Guandao Puer and Linedata Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guandao Puer 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 Guandao Puer Investment 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.