Correlation Between Inter Cars and LSI Software
Can any of the company-specific risk be diversified away by investing in both Inter Cars 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 Inter Cars and LSI Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Cars SA and LSI Software SA, you can compare the effects of market volatilities on Inter Cars 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 Inter Cars with a short position of LSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Cars and LSI Software.
Diversification Opportunities for Inter Cars and LSI Software
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Inter and LSI is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Inter Cars 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 Inter Cars 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 Inter Cars 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 Inter Cars i.e., Inter Cars and LSI Software go up and down completely randomly.
Pair Corralation between Inter Cars and LSI Software
Assuming the 90 days trading horizon Inter Cars is expected to generate 1.12 times less return on investment than LSI Software. In addition to that, Inter Cars is 1.06 times more volatile than LSI Software SA. It trades about 0.13 of its total potential returns per unit of risk. LSI Software SA is currently generating about 0.16 per unit of volatility. If you would invest 1,470 in LSI Software SA on September 1, 2024 and sell it today you would earn a total of 80.00 from holding LSI Software SA or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inter Cars SA vs. LSI Software SA
Performance |
| Timeline |
| Inter Cars SA |
| LSI Software SA |
Inter Cars and LSI Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Cars and LSI Software
The main advantage of trading using opposite Inter Cars and LSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Cars 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.| Inter Cars vs. Banco Santander SA | Inter Cars vs. UniCredit SpA | Inter Cars vs. CEZ as | Inter Cars vs. Polski Koncern Naftowy |
| LSI Software vs. Mlk Foods Public | LSI Software vs. Intersport Polska SA | LSI Software vs. PLAYWAY SA | LSI Software vs. Drago entertainment SA |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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