Correlation Between SOFTWARE MANSION and Live Motion

Can any of the company-specific risk be diversified away by investing in both SOFTWARE MANSION and Live Motion 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 SOFTWARE MANSION and Live Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SOFTWARE MANSION SPOLKA and Live Motion Games, you can compare the effects of market volatilities on SOFTWARE MANSION and Live Motion 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 SOFTWARE MANSION with a short position of Live Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOFTWARE MANSION and Live Motion.

Diversification Opportunities for SOFTWARE MANSION and Live Motion

0.41

Correlation Coefficient

SOFTWARE MANSION  Live Motion

Very weak diversification

The 3 months correlation between SOFTWARE and Live is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SOFTWARE MANSION SPOLKA and Live Motion Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Motion Games and SOFTWARE MANSION 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 SOFTWARE MANSION SPOLKA are associated (or correlated) with Live Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Motion Games has no effect on the direction of SOFTWARE MANSION i.e., SOFTWARE MANSION and Live Motion go up and down completely randomly.

Pair Corralation between SOFTWARE MANSION and Live Motion

Assuming the 90 days trading horizon SOFTWARE MANSION SPOLKA is expected to generate 0.62 times more return on investment than Live Motion. However, SOFTWARE MANSION SPOLKA is 1.62 times less risky than Live Motion. It trades about -0.08 of its potential returns per unit of risk. Live Motion Games is currently generating about -0.26 per unit of risk. If you would invest  3,380  in SOFTWARE MANSION SPOLKA on September 6, 2024 and sell it today you would lose (380.00) from holding SOFTWARE MANSION SPOLKA or give up 11.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

SOFTWARE MANSION SPOLKA  vs.  Live Motion Games

SOFTWARE MANSION SPOLKA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOFTWARE MANSION SPOLKA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Live Motion Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Motion Games 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 SOFTWARE MANSION and Live Motion

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

The idea behind SOFTWARE MANSION SPOLKA and Live Motion Games 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.