Correlation Between LSI Software and CEZ As
Can any of the company-specific risk be diversified away by investing in both LSI Software and CEZ As 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 CEZ As 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 CEZ as, you can compare the effects of market volatilities on LSI Software and CEZ As 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 CEZ As. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Software and CEZ As.
Diversification Opportunities for LSI Software and CEZ As
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LSI and CEZ is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding LSI Software SA and CEZ as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ as 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 CEZ As. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ as has no effect on the direction of LSI Software i.e., LSI Software and CEZ As go up and down completely randomly.
Pair Corralation between LSI Software and CEZ As
Assuming the 90 days trading horizon LSI Software is expected to generate 2.75 times less return on investment than CEZ As. In addition to that, LSI Software is 1.03 times more volatile than CEZ as. It trades about 0.05 of its total potential returns per unit of risk. CEZ as is currently generating about 0.14 per unit of volatility. If you would invest 14,800 in CEZ as on September 3, 2024 and sell it today you would earn a total of 1,650 from holding CEZ as or generate 11.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LSI Software SA vs. CEZ as
Performance |
| Timeline |
| LSI Software SA |
| CEZ as |
LSI Software and CEZ As Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LSI Software and CEZ As
The main advantage of trading using opposite LSI Software and CEZ As positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Software position performs unexpectedly, CEZ As 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 CEZ As will offset losses from the drop in CEZ As' long position.| LSI Software vs. Asseco Poland SA | LSI Software vs. Asseco Business Solutions | LSI Software vs. Quantum Software SA |
| CEZ As vs. ING Bank lski | CEZ As vs. Intersport Polska SA | CEZ As vs. Cloud Technologies SA | CEZ As vs. Marie Brizard Wine |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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