Correlation Between LSI Software and Biztech Konsulting
Can any of the company-specific risk be diversified away by investing in both LSI Software and Biztech Konsulting 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 Biztech Konsulting 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 Biztech Konsulting SA, you can compare the effects of market volatilities on LSI Software and Biztech Konsulting 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 Biztech Konsulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Software and Biztech Konsulting.
Diversification Opportunities for LSI Software and Biztech Konsulting
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LSI and Biztech is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding LSI Software SA and Biztech Konsulting SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biztech Konsulting 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 Biztech Konsulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biztech Konsulting has no effect on the direction of LSI Software i.e., LSI Software and Biztech Konsulting go up and down completely randomly.
Pair Corralation between LSI Software and Biztech Konsulting
Assuming the 90 days trading horizon LSI Software is expected to generate 8.17 times less return on investment than Biztech Konsulting. But when comparing it to its historical volatility, LSI Software SA is 2.1 times less risky than Biztech Konsulting. It trades about 0.04 of its potential returns per unit of risk. Biztech Konsulting SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Biztech Konsulting SA on September 28, 2024 and sell it today you would earn a total of 2.00 from holding Biztech Konsulting SA or generate 11.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.0% |
Values | Daily Returns |
LSI Software SA vs. Biztech Konsulting SA
Performance |
Timeline |
LSI Software SA |
Biztech Konsulting |
LSI Software and Biztech Konsulting Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LSI Software and Biztech Konsulting
The main advantage of trading using opposite LSI Software and Biztech Konsulting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Software position performs unexpectedly, Biztech Konsulting 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 Biztech Konsulting will offset losses from the drop in Biztech Konsulting's long position.LSI Software vs. Asseco Poland SA | LSI Software vs. Asseco Business Solutions | LSI Software vs. Quantum Software 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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