Correlation Between Linedata Services and Synergie

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

Diversification Opportunities for Linedata Services and Synergie

-0.22

Correlation Coefficient

Linedata Services  Synergie

Very good diversification

The 3 months correlation between Linedata and Synergie is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Linedata Services SA and Synergie SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synergie 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 Synergie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synergie SE has no effect on the direction of Linedata Services i.e., Linedata Services and Synergie go up and down completely randomly.

Pair Corralation between Linedata Services and Synergie

Assuming the 90 days trading horizon Linedata Services is expected to generate 105.12 times less return on investment than Synergie. But when comparing it to its historical volatility, Linedata Services SA is 1.1 times less risky than Synergie. It trades about 0.0 of its potential returns per unit of risk. Synergie SE is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,800  in Synergie SE on September 13, 2024 and sell it today you would earn a total of  220.00  from holding Synergie SE or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Linedata Services SA  vs.  Synergie SE

Linedata Services

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Linedata Services SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Linedata Services is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Synergie SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synergie SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Synergie is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Linedata Services and Synergie

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

The idea behind Linedata Services SA and Synergie 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.