Correlation Between LSI Software and Biztech Konsulting

Specify exactly 2 symbols:
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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.0%
ValuesDaily Returns

LSI Software SA  vs.  Biztech Konsulting SA

 Performance 
       Timeline  
LSI Software SA 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in LSI Software SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, LSI Software is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Biztech Konsulting 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Biztech Konsulting SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Biztech Konsulting reported solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind LSI Software SA and Biztech Konsulting 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

Other Complementary Tools

Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated