Correlation Between LSI Software and True Games

Can any of the company-specific risk be diversified away by investing in both LSI Software and True Games 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 True Games 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 True Games Syndicate, you can compare the effects of market volatilities on LSI Software and True Games 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 True Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Software and True Games.

Diversification Opportunities for LSI Software and True Games

0.25

Correlation Coefficient

LSI Software  True Games

Modest diversification

The 3 months correlation between LSI and True is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding LSI Software SA and True Games Syndicate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True Games Syndicate 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 True Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True Games Syndicate has no effect on the direction of LSI Software i.e., LSI Software and True Games go up and down completely randomly.

Pair Corralation between LSI Software and True Games

Assuming the 90 days trading horizon LSI Software SA is expected to generate 0.62 times more return on investment than True Games. However, LSI Software SA is 1.61 times less risky than True Games. It trades about 0.06 of its potential returns per unit of risk. True Games Syndicate is currently generating about -0.14 per unit of risk. If you would invest  1,560  in LSI Software SA on September 6, 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	Very Weak
Accuracy	90.32%
Values	Daily Returns

LSI Software SA  vs.  True Games Syndicate

LSI Software SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LSI Software SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, LSI Software may actually be approaching a critical reversion point that can send shares even higher in January 2025.

True Games Syndicate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days True Games Syndicate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with LSI Software and True Games

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

The idea behind LSI Software SA and True Games Syndicate 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .