Correlation Between LSI Software and APS Energia
Can any of the company-specific risk be diversified away by investing in both LSI Software and APS Energia 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 LSI Software and APS Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LSI Software SA and APS Energia SA, you can compare the effects of market volatilities on LSI Software and APS Energia 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 LSI Software with a short position of APS Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Software and APS Energia.
Diversification Opportunities for LSI Software and APS Energia
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LSI and APS is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding LSI Software SA and APS Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Energia SA and LSI Software 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 LSI Software SA are associated (or correlated) with APS Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Energia SA has no effect on the direction of LSI Software i.e., LSI Software and APS Energia go up and down completely randomly.
Pair Corralation between LSI Software and APS Energia
Assuming the 90 days trading horizon LSI Software SA is expected to generate 0.54 times more return on investment than APS Energia. However, LSI Software SA is 1.84 times less risky than APS Energia. It trades about 0.04 of its potential returns per unit of risk. APS Energia SA is currently generating about 0.01 per unit of risk. 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 |
LSI Software SA vs. APS Energia SA
Performance |
| Timeline |
| LSI Software SA |
| APS Energia SA |
LSI Software and APS Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LSI Software and APS Energia
The main advantage of trading using opposite LSI Software and APS Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Software position performs unexpectedly, APS Energia 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 APS Energia will offset losses from the drop in APS Energia's long position.The idea behind LSI Software SA and APS Energia SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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