Correlation Between Thermador Groupe and Linedata Services

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

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

Diversification Opportunities for Thermador Groupe and Linedata Services

-0.35

Correlation Coefficient

Thermador Groupe  Linedata Services

Very good diversification

The 3 months correlation between Thermador and Linedata is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Thermador Groupe SA and Linedata Services SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linedata Services and Thermador Groupe 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 Thermador Groupe SA 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 Thermador Groupe i.e., Thermador Groupe and Linedata Services go up and down completely randomly.

Pair Corralation between Thermador Groupe and Linedata Services

Assuming the 90 days trading horizon Thermador Groupe SA is expected to under-perform the Linedata Services. But the stock apears to be less risky and, when comparing its historical volatility, Thermador Groupe SA is 1.28 times less risky than Linedata Services. The stock trades about -0.13 of its potential returns per unit of risk. The Linedata Services SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. 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

Thermador Groupe SA  vs.  Linedata Services SA

Thermador Groupe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermador Groupe SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with Thermador Groupe and Linedata Services

The main advantage of trading using opposite Thermador Groupe and Linedata Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermador Groupe 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 Thermador Groupe SA 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..