Correlation Between Linedata Services and DONTNOD Entertainment

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

Diversification Opportunities for Linedata Services and DONTNOD Entertainment

0.81

Correlation Coefficient

Linedata Services  DONTNOD Entertainment

Very poor diversification

The 3 months correlation between Linedata and DONTNOD is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Linedata Services SA and DONTNOD Entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONTNOD Entertainment 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 DONTNOD Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONTNOD Entertainment has no effect on the direction of Linedata Services i.e., Linedata Services and DONTNOD Entertainment go up and down completely randomly.

Pair Corralation between Linedata Services and DONTNOD Entertainment

Assuming the 90 days trading horizon Linedata Services is expected to generate 8.98 times less return on investment than DONTNOD Entertainment. But when comparing it to its historical volatility, Linedata Services SA is 1.95 times less risky than DONTNOD Entertainment. It trades about 0.03 of its potential returns per unit of risk. DONTNOD Entertainment SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  72.00  in DONTNOD Entertainment SA on April 25, 2025 and sell it today you would earn a total of  18.00  from holding DONTNOD Entertainment SA or generate 25.0% return on investment over 90 days.

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

Linedata Services SA  vs.  DONTNOD Entertainment SA

Linedata Services

Risk-Adjusted Performance

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.

DONTNOD Entertainment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DONTNOD Entertainment SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, DONTNOD Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Linedata Services and DONTNOD Entertainment

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

The idea behind Linedata Services SA and DONTNOD Entertainment 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.