Correlation Between Noble Financials and LSI Software
Can any of the company-specific risk be diversified away by investing in both Noble Financials 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 Noble Financials and LSI Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noble Financials SA and LSI Software SA, you can compare the effects of market volatilities on Noble Financials 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 Noble Financials with a short position of LSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Financials and LSI Software.
Diversification Opportunities for Noble Financials and LSI Software
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Noble and LSI is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Noble Financials 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 Noble Financials 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 Noble Financials 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 Noble Financials i.e., Noble Financials and LSI Software go up and down completely randomly.
Pair Corralation between Noble Financials and LSI Software
Assuming the 90 days trading horizon Noble Financials SA is expected to generate 2.35 times more return on investment than LSI Software. However, Noble Financials is 2.35 times more volatile than LSI Software SA. It trades about 0.04 of its potential returns per unit of risk. LSI Software SA is currently generating about 0.02 per unit of risk. If you would invest 7,420 in Noble Financials SA on September 14, 2024 and sell it today you would earn a total of 1,160 from holding Noble Financials SA or generate 15.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Noble Financials SA vs. LSI Software SA
Performance |
| Timeline |
| Noble Financials |
| LSI Software SA |
Noble Financials and LSI Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noble Financials and LSI Software
The main advantage of trading using opposite Noble Financials and LSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Financials 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.| Noble Financials vs. Globe Trade Centre | Noble Financials vs. MLP Group SA | Noble Financials vs. Asseco Business Solutions | Noble Financials vs. Asseco South Eastern |
| LSI Software vs. Asseco Poland SA | LSI Software vs. Asseco Business Solutions | LSI Software vs. Quantum Software 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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