Correlation Between True Games and LSI Software
Can any of the company-specific risk be diversified away by investing in both True Games and LSI Software 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 True Games and LSI Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between True Games Syndicate and LSI Software SA, you can compare the effects of market volatilities on True Games and LSI Software 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 True Games with a short position of LSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of True Games and LSI Software.
Diversification Opportunities for True Games and LSI Software
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between True and LSI is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding True Games Syndicate and LSI Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSI Software SA and True Games 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 True Games Syndicate are associated (or correlated) with LSI Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSI Software SA has no effect on the direction of True Games i.e., True Games and LSI Software go up and down completely randomly.
Pair Corralation between True Games and LSI Software
Assuming the 90 days trading horizon True Games Syndicate is expected to generate 3.33 times more return on investment than LSI Software. However, True Games is 3.33 times more volatile than LSI Software SA. It trades about 0.03 of its potential returns per unit of risk. LSI Software SA is currently generating about 0.04 per unit of risk. If you would invest 52.00 in True Games Syndicate on September 8, 2024 and sell it today you would lose (4.00) from holding True Games Syndicate or give up 7.69% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 83.68% |
Values | Daily Returns |
True Games Syndicate vs. LSI Software SA
Performance |
Timeline |
True Games Syndicate |
LSI Software SA |
True Games and LSI Software Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with True Games and LSI Software
The main advantage of trading using opposite True Games and LSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if True Games position performs unexpectedly, LSI Software 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 LSI Software will offset losses from the drop in LSI Software's long position.True Games vs. Mlk Foods Public | True Games vs. Gamedust SA | True Games vs. Road Studio SA | True Games vs. Intersport Polska 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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