Correlation Between LSI Software and MW Trade
Can any of the company-specific risk be diversified away by investing in both LSI Software and MW Trade 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 MW Trade 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 MW Trade SA, you can compare the effects of market volatilities on LSI Software and MW Trade 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 MW Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Software and MW Trade.
Diversification Opportunities for LSI Software and MW Trade
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LSI and MWT is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding LSI Software SA and MW Trade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MW Trade 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 MW Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MW Trade SA has no effect on the direction of LSI Software i.e., LSI Software and MW Trade go up and down completely randomly.
Pair Corralation between LSI Software and MW Trade
Assuming the 90 days trading horizon LSI Software is expected to generate 4.62 times less return on investment than MW Trade. But when comparing it to its historical volatility, LSI Software SA is 1.3 times less risky than MW Trade. It trades about 0.07 of its potential returns per unit of risk. MW Trade SA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 292.00 in MW Trade SA on November 3, 2024 and sell it today you would earn a total of 78.00 from holding MW Trade SA or generate 26.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LSI Software SA vs. MW Trade SA
Performance |
| Timeline |
| LSI Software SA |
| MW Trade SA |
LSI Software and MW Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LSI Software and MW Trade
The main advantage of trading using opposite LSI Software and MW Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Software position performs unexpectedly, MW Trade 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 MW Trade will offset losses from the drop in MW Trade's long position.| LSI Software vs. Quantum Software SA | LSI Software vs. Detalion Games SA | LSI Software vs. Movie Games SA | LSI Software vs. Altustfi |
| MW Trade vs. Kruk SA | MW Trade vs. Investment Friends Capital | MW Trade vs. Asseco Business Solutions | MW Trade vs. Detalion Games 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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