Correlation Between LSI Software and Noble Financials
Can any of the company-specific risk be diversified away by investing in both LSI Software and Noble Financials 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 Noble Financials 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 Noble Financials SA, you can compare the effects of market volatilities on LSI Software and Noble Financials 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 Noble Financials. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Software and Noble Financials.
Diversification Opportunities for LSI Software and Noble Financials
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LSI and Noble is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding LSI Software SA and Noble Financials SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble Financials 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 Noble Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble Financials has no effect on the direction of LSI Software i.e., LSI Software and Noble Financials go up and down completely randomly.
Pair Corralation between LSI Software and Noble Financials
Assuming the 90 days trading horizon LSI Software is expected to generate 3.59 times less return on investment than Noble Financials. But when comparing it to its historical volatility, LSI Software SA is 2.35 times less risky than Noble Financials. It trades about 0.02 of its potential returns per unit of risk. Noble Financials SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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 |
LSI Software SA vs. Noble Financials SA
Performance |
| Timeline |
| LSI Software SA |
| Noble Financials |
LSI Software and Noble Financials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LSI Software and Noble Financials
The main advantage of trading using opposite LSI Software and Noble Financials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Software position performs unexpectedly, Noble Financials 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 Noble Financials will offset losses from the drop in Noble Financials' long position.| LSI Software vs. Asseco Poland SA | LSI Software vs. Asseco Business Solutions | LSI Software vs. Quantum Software SA |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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