Correlation Between APS Energia and LSI Software
Can any of the company-specific risk be diversified away by investing in both APS Energia 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 APS Energia and LSI Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APS Energia SA and LSI Software SA, you can compare the effects of market volatilities on APS Energia 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 APS Energia with a short position of LSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of APS Energia and LSI Software.
Diversification Opportunities for APS Energia and LSI Software
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between APS and LSI is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding APS Energia SA 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 APS Energia 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 APS Energia SA 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 APS Energia i.e., APS Energia and LSI Software go up and down completely randomly.
Pair Corralation between APS Energia and LSI Software
Assuming the 90 days trading horizon APS Energia is expected to generate 2.41 times less return on investment than LSI Software. In addition to that, APS Energia is 1.84 times more volatile than LSI Software SA. It trades about 0.01 of its total potential returns per unit of risk. LSI Software SA is currently generating about 0.04 per unit of volatility. If you would invest 1,174 in LSI Software SA on September 3, 2024 and sell it today you would earn a total of 376.00 from holding LSI Software SA or generate 32.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
APS Energia SA vs. LSI Software SA
Performance |
| Timeline |
| APS Energia SA |
| LSI Software SA |
APS Energia and LSI Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APS Energia and LSI Software
The main advantage of trading using opposite APS Energia and LSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APS Energia 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.| APS Energia vs. Asseco Business Solutions | APS Energia vs. Detalion Games SA | APS Energia vs. Kogeneracja SA | APS Energia vs. Asseco South Eastern |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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