Correlation Between LSI Software and Betacom SA
Can any of the company-specific risk be diversified away by investing in both LSI Software and Betacom SA 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 LSI Software and Betacom SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LSI Software SA and Betacom SA, you can compare the effects of market volatilities on LSI Software and Betacom SA 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 LSI Software with a short position of Betacom SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Software and Betacom SA.
Diversification Opportunities for LSI Software and Betacom SA
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LSI and Betacom is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding LSI Software SA and Betacom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betacom SA and LSI Software 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 LSI Software SA are associated (or correlated) with Betacom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betacom SA has no effect on the direction of LSI Software i.e., LSI Software and Betacom SA go up and down completely randomly.
Pair Corralation between LSI Software and Betacom SA
Assuming the 90 days trading horizon LSI Software SA is expected to generate 0.85 times more return on investment than Betacom SA. However, LSI Software SA is 1.17 times less risky than Betacom SA. It trades about 0.06 of its potential returns per unit of risk. Betacom SA is currently generating about -0.09 per unit of risk. If you would invest 1,560 in LSI Software SA on September 7, 2024 and sell it today you would earn a total of 110.00 from holding LSI Software SA or generate 7.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
LSI Software SA vs. Betacom SA
Performance |
Timeline |
LSI Software SA |
Betacom SA |
LSI Software and Betacom SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LSI Software and Betacom SA
The main advantage of trading using opposite LSI Software and Betacom SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Software position performs unexpectedly, Betacom SA 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 Betacom SA will offset losses from the drop in Betacom SA's long position.LSI Software vs. Asseco Poland SA | LSI Software vs. Detalion Games SA | LSI Software vs. Tower Investments SA | LSI Software vs. Movie Games SA |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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