Correlation Between Deswell Industries and LSI Industries
Can any of the company-specific risk be diversified away by investing in both Deswell Industries and LSI Industries 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 Deswell Industries and LSI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deswell Industries and LSI Industries, you can compare the effects of market volatilities on Deswell Industries and LSI Industries 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 Deswell Industries with a short position of LSI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deswell Industries and LSI Industries.
Diversification Opportunities for Deswell Industries and LSI Industries
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deswell and LSI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and LSI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSI Industries and Deswell Industries 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 Deswell Industries are associated (or correlated) with LSI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSI Industries has no effect on the direction of Deswell Industries i.e., Deswell Industries and LSI Industries go up and down completely randomly.
Pair Corralation between Deswell Industries and LSI Industries
Given the investment horizon of 90 days Deswell Industries is expected to generate 4.78 times less return on investment than LSI Industries. But when comparing it to its historical volatility, Deswell Industries is 1.62 times less risky than LSI Industries. It trades about 0.15 of its potential returns per unit of risk. LSI Industries is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 1,662 in LSI Industries on August 28, 2024 and sell it today you would earn a total of 413.00 from holding LSI Industries or generate 24.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deswell Industries vs. LSI Industries
Performance |
| Timeline |
| Deswell Industries |
| LSI Industries |
Deswell Industries and LSI Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deswell Industries and LSI Industries
The main advantage of trading using opposite Deswell Industries and LSI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deswell Industries position performs unexpectedly, LSI Industries 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 Industries will offset losses from the drop in LSI Industries' long position.| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. Micropac Industries | Deswell Industries vs. SigmaTron International |
| LSI Industries vs. Plexus Corp | LSI Industries vs. OSI Systems | LSI Industries vs. CTS Corporation | LSI Industries vs. Benchmark Electronics |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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