Correlation Between LSI Software and Saule Technologies
Can any of the company-specific risk be diversified away by investing in both LSI Software and Saule Technologies 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 Saule Technologies 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 Saule Technologies SA, you can compare the effects of market volatilities on LSI Software and Saule Technologies 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 Saule Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of LSI Software and Saule Technologies.
Diversification Opportunities for LSI Software and Saule Technologies
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LSI and Saule is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding LSI Software SA and Saule Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saule Technologies 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 Saule Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saule Technologies has no effect on the direction of LSI Software i.e., LSI Software and Saule Technologies go up and down completely randomly.
Pair Corralation between LSI Software and Saule Technologies
Assuming the 90 days trading horizon LSI Software SA is expected to generate 0.28 times more return on investment than Saule Technologies. However, LSI Software SA is 3.62 times less risky than Saule Technologies. It trades about 0.16 of its potential returns per unit of risk. Saule Technologies SA is currently generating about -0.06 per unit of risk. If you would invest 1,470 in LSI Software SA on September 1, 2024 and sell it today you would earn a total of 80.00 from holding LSI Software SA or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LSI Software SA vs. Saule Technologies SA
Performance |
| Timeline |
| LSI Software SA |
| Saule Technologies |
LSI Software and Saule Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LSI Software and Saule Technologies
The main advantage of trading using opposite LSI Software and Saule Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LSI Software position performs unexpectedly, Saule Technologies 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 Saule Technologies will offset losses from the drop in Saule Technologies' long position.| LSI Software vs. Mlk Foods Public | LSI Software vs. Intersport Polska SA | LSI Software vs. PLAYWAY SA | LSI Software vs. Drago entertainment SA |
| Saule Technologies vs. SOFTWARE MANSION SPOLKA | Saule Technologies vs. Investment Friends Capital | Saule Technologies vs. Cloud Technologies SA | Saule Technologies vs. Quantum Software 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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