Correlation Between LSI Software and Medicofarma Biotech
Can any of the company-specific risk be diversified away by investing in both LSI Software and Medicofarma Biotech 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 Medicofarma Biotech 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 Medicofarma Biotech SA, you can compare the effects of market volatilities on LSI Software and Medicofarma Biotech 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 Medicofarma Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Software and Medicofarma Biotech.
Diversification Opportunities for LSI Software and Medicofarma Biotech
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LSI and Medicofarma is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding LSI Software SA and Medicofarma Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicofarma Biotech 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 Medicofarma Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicofarma Biotech has no effect on the direction of LSI Software i.e., LSI Software and Medicofarma Biotech go up and down completely randomly.
Pair Corralation between LSI Software and Medicofarma Biotech
Assuming the 90 days trading horizon LSI Software SA is expected to generate 0.47 times more return on investment than Medicofarma Biotech. However, LSI Software SA is 2.13 times less risky than Medicofarma Biotech. It trades about 0.01 of its potential returns per unit of risk. Medicofarma Biotech SA is currently generating about -0.07 per unit of risk. If you would invest 1,515 in LSI Software SA on August 28, 2024 and sell it today you would lose (15.00) from holding LSI Software SA or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LSI Software SA vs. Medicofarma Biotech SA
Performance |
| Timeline |
| LSI Software SA |
| Medicofarma Biotech |
LSI Software and Medicofarma Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LSI Software and Medicofarma Biotech
The main advantage of trading using opposite LSI Software and Medicofarma Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Software position performs unexpectedly, Medicofarma Biotech 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 Medicofarma Biotech will offset losses from the drop in Medicofarma Biotech's long position.| LSI Software vs. 3R Games SA | LSI Software vs. Echo Investment SA | LSI Software vs. GreenX Metals | LSI Software vs. Intersport Polska SA |
| Medicofarma Biotech vs. Mercator Medical SA | Medicofarma Biotech vs. Inter Cars SA | Medicofarma Biotech vs. SOFTWARE MANSION SPOLKA | Medicofarma Biotech vs. True Games Syndicate |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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