Correlation Between LSI Software and RAFAKO SA
Can any of the company-specific risk be diversified away by investing in both LSI Software and RAFAKO SA 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 RAFAKO SA 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 RAFAKO SA, you can compare the effects of market volatilities on LSI Software and RAFAKO SA 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 RAFAKO SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Software and RAFAKO SA.
Diversification Opportunities for LSI Software and RAFAKO SA
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LSI and RAFAKO is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding LSI Software SA and RAFAKO SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAFAKO 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 RAFAKO SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAFAKO SA has no effect on the direction of LSI Software i.e., LSI Software and RAFAKO SA go up and down completely randomly.
Pair Corralation between LSI Software and RAFAKO SA
Assuming the 90 days trading horizon LSI Software SA is expected to generate 0.23 times more return on investment than RAFAKO SA. However, LSI Software SA is 4.26 times less risky than RAFAKO SA. It trades about 0.12 of its potential returns per unit of risk. RAFAKO SA is currently generating about -0.13 per unit of risk. If you would invest 1,490 in LSI Software SA on August 31, 2024 and sell it today you would earn a total of 60.00 from holding LSI Software SA or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
LSI Software SA vs. RAFAKO SA
Performance |
| Timeline |
| LSI Software SA |
| RAFAKO SA |
LSI Software and RAFAKO SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LSI Software and RAFAKO SA
The main advantage of trading using opposite LSI Software and RAFAKO SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Software position performs unexpectedly, RAFAKO SA 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 RAFAKO SA will offset losses from the drop in RAFAKO SA's long position.| LSI Software vs. Asseco Poland SA | LSI Software vs. Quantum Software SA | LSI Software vs. Detalion Games SA | LSI Software vs. Asseco South Eastern |
| RAFAKO SA vs. LSI Software SA | RAFAKO SA vs. Biztech Konsulting SA | RAFAKO SA vs. Carlson Investments SA | RAFAKO SA vs. MW Trade 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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