Correlation Between TRAINLINE PLC and OPERA SOFTWARE

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

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

Diversification Opportunities for TRAINLINE PLC and OPERA SOFTWARE

-0.37

Correlation Coefficient

TRAINLINE PLC  OPERA SOFTWARE

Very good diversification

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

Pair Corralation between TRAINLINE PLC and OPERA SOFTWARE

Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to under-perform the OPERA SOFTWARE. In addition to that, TRAINLINE PLC is 1.28 times more volatile than OPERA SOFTWARE. It trades about -0.01 of its total potential returns per unit of risk. OPERA SOFTWARE is currently generating about 0.32 per unit of volatility. If you would invest  72.00  in OPERA SOFTWARE on April 21, 2025 and sell it today you would earn a total of  40.00  from holding OPERA SOFTWARE or generate 55.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TRAINLINE PLC LS  vs.  OPERA SOFTWARE

TRAINLINE PLC LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAINLINE PLC LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TRAINLINE PLC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

OPERA SOFTWARE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OPERA SOFTWARE are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, OPERA SOFTWARE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRAINLINE PLC and OPERA SOFTWARE

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

The idea behind TRAINLINE PLC LS and OPERA SOFTWARE 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.