Correlation Between Partner Communications and Lindsay

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

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

Diversification Opportunities for Partner Communications and Lindsay

0.37

Correlation Coefficient

Partner Communications  Lindsay

Weak diversification

The 3 months correlation between Partner and Lindsay is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Partner Communications and Lindsay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsay and Partner Communications 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 Partner Communications are associated (or correlated) with Lindsay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsay has no effect on the direction of Partner Communications i.e., Partner Communications and Lindsay go up and down completely randomly.

Pair Corralation between Partner Communications and Lindsay

Assuming the 90 days horizon Partner Communications is expected to generate 0.71 times more return on investment than Lindsay. However, Partner Communications is 1.41 times less risky than Lindsay. It trades about 0.22 of its potential returns per unit of risk. Lindsay is currently generating about -0.03 per unit of risk. If you would invest  695.00  in Partner Communications on December 2, 2024 and sell it today you would earn a total of  35.00  from holding Partner Communications or generate 5.04% return on investment over 90 days.

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

Partner Communications  vs.  Lindsay

Partner Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Partner Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Partner Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Lindsay

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lindsay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Lindsay is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Partner Communications and Lindsay

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

The idea behind Partner Communications and Lindsay 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.