Correlation Between Logismos Information and LAMDA Development

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

By analyzing existing cross correlation between Logismos Information Systems and LAMDA Development SA, you can compare the effects of market volatilities on Logismos Information and LAMDA Development 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 Logismos Information with a short position of LAMDA Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Logismos Information and LAMDA Development.

Diversification Opportunities for Logismos Information and LAMDA Development

0.5

Correlation Coefficient

Logismos Information  LAMDA Development

Very weak diversification

The 3 months correlation between Logismos and LAMDA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Logismos Information Systems and LAMDA Development SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAMDA Development and Logismos Information 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 Logismos Information Systems are associated (or correlated) with LAMDA Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAMDA Development has no effect on the direction of Logismos Information i.e., Logismos Information and LAMDA Development go up and down completely randomly.

Pair Corralation between Logismos Information and LAMDA Development

Assuming the 90 days trading horizon Logismos Information is expected to generate 2.71 times less return on investment than LAMDA Development. But when comparing it to its historical volatility, Logismos Information Systems is 1.32 times less risky than LAMDA Development. It trades about 0.02 of its potential returns per unit of risk. LAMDA Development SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  711.00  in LAMDA Development SA on September 14, 2024 and sell it today you would earn a total of  17.00  from holding LAMDA Development SA or generate 2.39% return on investment over 90 days.

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

Logismos Information Systems  vs.  LAMDA Development SA

Logismos Information

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Logismos Information Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Logismos Information is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

LAMDA Development

Risk-Adjusted Performance

2 of 100

Insignificant

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

Pair Trading with Logismos Information and LAMDA Development

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

The idea behind Logismos Information Systems and LAMDA Development 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .